March 4, 2026
A Refundable State EITC is a Boost to Working Families: See How Much
The Earned Income Tax Credit (EITC) is a commonsense way to support families with low to moderate incomes. According to 2022 data, over 500,000 working families in Virginia 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 in supporting working families with the lowest incomes, in part because it is refundable, so families receive the full value of the credit they earned.
Prior to 2022, Virginia had a long-standing state EITC set at 20% of the federal credit. This credit was not refundable, meaning that many of the families it was intended to help were blocked from accessing the full credit. In 2022, legislators improved the state’s version of the credit by adding a refundable option equal to 15% of the federal EITC a family claims. Despite being smaller, this option was often more beneficial for families than the larger, but nonrefundable credit. In 2025, lawmakers improved the EITC again, increasing the refundable credit to 20%, helping more families see more back at tax time.
An improved state credit also helps address Virginia’s upside-down tax code. Paired with an increase to the state deduction, the state’s legislative research agency, JLARC, found in 2023 that the 15% refundable EITC option made the state’s tax code more fair. Even so, working families with low incomes in Virginia still pay more in state and local taxes as a share of their income than the highest-income Virginians: households making under $26,500 a year paid an average 8.7%, while households making $737,500 or more paid only 7.2%, according to a January 2024 report. The newly improved state Earned Income Tax Credit will help balance this unequal contribution. But without further legislative action, the refundable credit is set to expire altogether after 2026. Lawmakers should act to make this important policy permanent.
Claiming Full Credit
Making the state credit refundable increases its impact on families with low incomes. In addition to being the country’s most successful and proven anti-poverty tool for children, lifting over 2.3 million children out of poverty in 2024, it also helps low-income families get the resources they need to get to their jobs, keep the lights and heat on, and put food on the table. Making further improvements to the credit, by making it fully refundable and allowing access to more families, will be critical to supporting Virginia families and our communities.
See how a refundable EITC helps families who need it most
Use the calculator to see how the 20% refundable state credit helps families with low and moderate incomes!
*The calculator does not include Virginia’s Spouse Tax Adjustment (STA), which reduces state taxes by up to $259 for married joint filers if each spouse received income during the taxable year. As a result, the calculator may understate the benefit of refundability for those tax filers.
Some notes about the calculator: This simple calculator is for estimation purposes only. Calculations used are for tax year 2025 and are based solely on the information you enter and current tax law.
