Massachusetts Budget and Policy Center: MassBudget Fact Sheet Examines Proposal to Reform and Increase the Earned Income Tax Credit

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MassBudget Fact Sheet Examines Proposal to Reform and Increase the Earned Income Tax Credit

The state's Earned Income Tax Credit (EITC) aims to improve the economic security of lower income working families by increasing their after-tax earnings. A growing body of research has found that raising the incomes of lower-income families provides benefits through the life-cycle: improving the health of children and mothers; boosting school performance; and increasing long-term earnings.

MassBudget's updated fact sheet "Massachusetts' Earned Income Tax Credit and the Current Proposal for Increase and Reform" examines a proposal from the Senate Ways and Means Committee to reform and increase the state EITC.

The Senate proposal would increase the value of the EITC provided by the Commonwealth to 28 percent of the federal EITC benefit, up from 23 percent today.  It would also change the way the EITC is calculated for people who have income in Massachusetts but are not full-year residents.  Currently those households receive a pro-rated share of EITC benefits based on the share or their income that is earned in Massachusetts.  The new proposal would prorate the benefit based on the amount of time the household lives in Massachusetts.  The largest effect of this change would be that people who are full- time residents of another state but earn income in Massachusetts would no longer be able to receive the Massachusetts EITC (those taxpayers are often able to receive a state EITC in the state where they are residents - if that state has a state EITC).

   

MassBudget's factsheet on the EITC explains the benefits for families with different incomes and numbers of children under the current program, provides estimates of the number of current beneficiaries, and describes the cost of the new proposal and how it is paid for. The fact sheet also provides an overview of research on the effects of the EITC on families and children.

You can read the new fact sheet (HERE).

For information on how many people receive the EITC in each town, see (HERE).

The Massachusetts Budget and Policy Center (MassBudget) produces policy research, analysis, and data-driven recommendations focused on improving the lives of low- and middle-income children and adults, strengthening our state's economy, and enhancing the quality of life in Massachusetts. MASSACHUSETTS BUDGET AND POLICY CENTER 15 COURT SQUARE, SUITE 700 BOSTON, MA 02108

Massachusetts Budget and Policy Center, 15 Court Square,Suite 700, Boston, MA 02108