Earned Income Tax Credit: Income Boost to Workers

Posted by: Teaway Zehyoue Collins

The Earned Income Tax Credit (EITC) is a federal and state tax credit for working families. Low-and-moderate-income working families that qualify for federal EITC are automatically eligible for Louisiana’s EITC. In 2008, Louisiana became the first southern state to establish a state EITC and 516,934 working families in Louisiana benefit from the EITC. Low-and-moderate-income working families with children in Louisiana can qualify for EITC if their annual income is below $35,000 to $48,000 (depending on their marital status and number of children in the family). Working individuals without children can also receive a small EITC if their annual income is below $13,000 ($18,000 for married couples). Louisiana’s EITC is 3.5 percent of the federal EITC.  EITC is a refundable tax credit, which means that a qualifying family receives the full amount of the credit for which they qualify regardless of whether they have a sufficiently large tax liability to offset the credit.  Working families in Louisiana receive on average a $2,367 tax break and working individuals without children receive a $500 tax break.

EITC reduces poverty and encourages work especially among low-income families by supplementing the earnings of minimum wage workers and providing working families with a needed income boost. As a result of the economic hardship many families in Louisiana are facing due to the lingering effects of the Great Recession, the American Recovery and Reinvestment Act of 2009 (ARRA) provided enhanced EITC benefits for two years by allowing families with three or more children to receive an additional $629 tax break and increasing benefits for married couples without children. By helping working families especially low-income families make ends meet, EITC continues to be the nation’s most effective antipoverty program.