Building on What Works: A Refundable EITC Would Support Families in Every District and Locality
The Earned Income Tax Credit (EITC) is a commonsense way to support families with low to moderate incomes. Over 600,000 of Virginia’s working families currently receive the federal Earned Income Tax Credit (EITC), which helps families to put food on the table, keep up with utility bills, and afford other necessities. The federal EITC is one of the most effective tools to bring families above the poverty line.
Part of what makes the federal EITC effective is that it is refundable – meaning that if the earned credit is larger than the income tax owed, the remainder of the credit is refunded, helping to offset sales and property taxes as well.
Twenty-nine states, the District of Columbia, and Puerto Rico have enacted their own versions of the EITC to supplement the federal credit. Virginia’s state EITC is available to working families who claim the federal EITC on their tax returns and equals 20% of the value of the federal EITC. Like the federal credit, state credits boost working families who may be struggling to make ends meet, and the credit is linked to a range of benefits, such as improved health outcomes.
However, Virginia’s EITC is “nonrefundable,” which means the state imposes restrictions around how much of the state EITC a family can claim. As a result, Virginia’s EITC does not allow all 600,000 families to receive the full value of the state credit they’ve earned. The restrictions add up to over $200 million that working families miss out on each year.
During the 2020 legislative session, Virginia lawmakers have an opportunity to help Virginia’s working families by lifting these restrictions and making the state credit refundable.
Or click through to see the latest numbers of families who receive the EITC in each state Senate and House district and locality, using the current district boundaries and the most recent data from the Internal Revenue Service.