2015 Earned Income Tax Credits (EITC) Legislation

10/26/2015

Overview

One oAlternative Textf the ways states have used policy to help low-to-moderate-income working people get ahead is to offer a earned income tax credit to complement federal law. The federal earned income tax credit (EITC) reduces the amount of taxes owed, and refunds the difference if the credit is larger than the amount owed. Rhode Island was the first to enact a state EITC in 1986 after the federal EITC was enacted in 1975. Twenty-six states and the District of Columbia also had an EITC in 2015.

During the 2015 legislative session, California, Iowa, Massachusetts, New Jersey, Rhode Island, Texas and Virginia collectively enacted eight bills. These bills aimed to create state EITCs, increase the rate of state credits and conduct EITC outreach. 

Summary of EITC Bill Actions in 2015

EITC Bill Action

Enactments - States

Notes

Create

1

California

During the 2015 session, California became the 26th state to create a state level EITC.

Increase

3

Massachusetts, New Jersey and Rhode Island.

None.

Outreach

4
Iowa, Texas and Virginia.

Two of the bills to conduct outreach were enacted in Texas. Both of these bills were aimed at increasing awareness of the federal EITC among recipients of various state services. The two bills in Iowa and Virginia continued appropriations to nonprofits in the respective states that provide outreach, education, and tax preparation services to citizens.


2015 State EITC Legislation

California

A93, Enacted.
Creates a refundable state EITC making California the 26th state to offer their own EITC. 

Iowa

S505, Enacted. 
Appropriates $293,517 for continuation of grants to two local non-profits to provide tax preparation services and conduct EITC outreach.

Massachusetts

H3671, Enacted.
Increases the rate of the state EITC from 15 to 23 percent of the federal credit.

New Jersey

A4602, Enacted.
Increases the rate of the state EITC from 20 to 30 percent of the federal credit.

Rhode Island

H5900Aaa, Enacted.
Increases the rate of the state EITC from 10 to 12.5 percent of the federal credit.

Texas

S219, Enacted. 
Requires that individuals and families receiving various state assistance and benefits are also provided educational materials related to the federal EITC.

H1, Enacted. 
Mandates the Texas Workforce Commission and local workforce development boards to assist recipients of TANF who become employed, as well as other low-income workers, to apply for the federal EITC.

Virginia

H1400, Enacted.
Appropriates $185,725 from the TANF block grant to the state to contract with the Virginia Community Action Partnership to connect with community nonprofits across the state to provide outreach, education, and tax preparation services to citizens that may be eligible for the federal EITC.

Jessica Hathaway is a research analyst II. 

Additional Resources