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What is EITC?

What is the Earned Income Tax Credit (EITC)?

The EITC benefits working families and individuals by helping to keep them out of poverty. The EITC is both a federal and state tax credit that can only be claimed by taxpayers who earn income through work. The current state credit in Illinois is 10% of the federal credit.

Who benefits, and how?

Over 900,000 lower-wage Illinois taxpayers are able to retain more of their earnings through the EITC each year. As a result, from 2009-2011, 294,000 recipients were lifted out of poverty, including 146,000 Illinois children.

The amount of the credit varies by family income and size. In 2013, a family with two children and a full-time minimum wage worker earning $16,500 was eligible for a state EITC of $537. The average value of the state credit was $236.

Why is the EITC so important?

The EITC lifts more lower-paid workers out of poverty than any other policy tool. It reduces poverty by encouraging work and supplementing the wages of poor and middle income workers. The EITC helps these workers afford basic needs like child care and transportation.

The EITC is good for local businesses and has the support of the business community. The EITC boosts local economies across Illinois by helping lower-wage workers keep more of their income—income they spend at local businesses to buy groceries, pay for car repairs, or put their child in day care.

Why should it be doubled, and why now?

Doubling the EITC is good for both lower-wage working families and small businesses—two vital pieces of the Illinois economy that must be rebuilt following the great recession.

Particularly for working families with children, the EITC is a step up and out of poverty.

For small businesses, the EITC is a way to keep working families as customers by boosting after-tax income and stimulating consumer spending. In 2006, the Brookings Institution found that every dollar a family saves through the EITC translates into $1.58 put back into local economies.


Questions?

Send your inquiries to:

Emily Miller
Policy Advocacy Director
Voices for Illinois Children
773-203-9654
emiller@voices4kids.org


EITC Works! Coalition members

  • Action Now
  • Center for Economic Progress
  • Center for Tax and Budget Accountability
  • Chicago Coalition for the Homeless
  • Chicago Jobs Council
  • Citizen Action
  • Community Renewal Society
  • EverThrive Illinois
  • Fight Crime: Invest in Kids - Illinois
  • Greater Chicago Food Depository
  • Health and Disability Advocates
  • Heartland Alliance for Human Needs & Human Rights
  • Illinois Action for Children
  • Illinois Asset Building Group
  • Illinois Coalition for Immigrant and Refugee Rights
  • Illinois Public Health Association
  • Illinois Retail Merchants Association
  • Latino Policy Forum
  • Lutheran Advocacy Illinois
  • Lutheran Child and Family Services of Illinois
  • Lutheran Social Services of Illinois
  • National Association of Social Workers, Illinois Chapter
  • Ounce of Prevention Fund
  • Project Irene
  • Responsible Budget Coalition
  • Sargent Shriver National Center on Poverty Law
  • SEIU HCII
  • The Chicago Medical Legal Partnership for Children
  • United Food and Commercial Workers
  • Voices for Illinois Children
  • Women Employed
  • Woodstock Institute