Last year California became the 26th state to expand upon the federal Earned Income Tax Credit (EITC) and offer low-income workers a state tax credit to encourage employment and offset income taxes. For the first time, qualifying households will receive both a federal and state EITC when they file their 2015 returns this tax season. The federal EITC lifted about 6.2 million people out of poverty in 2013, and studies have shown that it encourages significant numbers of single parents to leave welfare for work. Hilary Hoyne, a Professor of Public Policy and Economics at UC Berkeley, described the federal program as “one of the most successful labor market innovations in U.S. history.”
California’s EITC is expected to benefit about 2 million Californians this year and will substantially increase the earnings of very low-income households. Only about one-fifth of those who benefit from the federal EITC will qualify for the state credit, because it targets households with annual earnings below $14,000. However, qualified families with two children could see their incomes rise by nearly 75% from both the state and federal credits. This increase in disposable income will help families in deep poverty better afford their basic necessities like food, housing, and healthcare.
Households that earned less than $13,870 in 2015 may be eligible for the state credit. If they earned less than $53,267, they may qualify for the federal EITC. Because very low-income earners are not required to file their taxes with the IRS, qualified households that don’t submit tax returns will not receive any EITC reimbursements. In order to increase awareness of and participation in this program, the Food Bank is assisting with community outreach by disseminating information on eligibility requirements and free tax return preparation services through our Farm 2 Kids and Food Assistance Programs. Households must file for this credit by April 18th and can call 211 or visit www.earnitkeepitsaveit.org for more information.
Carly Finkle is the Advocacy Manager for the Food Bank of Contra Costa and Solano and can be reached at email@example.com.