Earned Income Tax Credits

Strengthening household financial security can help prevent child abuse and neglect. These examples, highlighting Iowa and California, provide background information on how earned income tax credits (EITCs) may reduce the occurrence and severity of certain risk factors for child abuse and neglect and promote protective factors in communities.

EITCs are a direct form of income support that federal, state, and local governments provide to help alleviate poverty and strengthen household financial security. In the case of refundable EITCs, such as the federal EITC and some state-level EITCs, working families may receive a refund if the amount of tax they owe is less that the value of the earned-income tax credit.

These credits are provided once taxes are filed, regardless of a family’s total tax liability. This means working families receive the credit immediately, even if they still have a pending tax bill. Having access to funds enables qualifying families to pay for necessities, while potentially taking advantage of repayment plans for their remaining tax bill.

Working families may combine the federal EITC with the child tax credit to maximize their benefits. In 2015, the combined benefit of the EITC and the child tax credit led to an estimated 9.4 million taxpayers being lifted out of poverty, which included 5 million children.

Early Data Point to EITC as a Method for Reducing Child Abuse & Neglect

Public health researchers studying the EITC have found that income supports associated with refundable EITCs contribute to the reduced likelihood of child abuse and neglect by increasing household income, a key protective factor. A 2017 study suggests that increases in income stemming from the EITC are associated with reductions both in rates of child neglect and the involvement of child protective services, particularly for low-income households headed by single mothers.

EITC and Risk Factors

Increased parental incomes can address multiple risk factors associated with child abuse and neglect. EITCs can reduce the financial burden of low-income families, reduce foreclosures and evictions and increase home ownership, and improve maternal mental health. Household financial security can bolster parents’ capacity to meet their children’s basic needs, including food, shelter, and medical care. Researchers also find that EITC is associated with decreased stress and mental health problems, helping alleviate parental stress and depression. This reduction in stress can also lead to a reduction in dysfunctional modes of coping, such as substance use or abuse, which is also a risk factor for child abuse.

EITC and Protective Factors

Higher household income levels are a protective factor against child abuse and neglect. Increasing household income through EITCs can also free up resources for child care expenses; researchers have found accessing developmentally appropriate child care can act as a protective factor for preventing child abuse and neglect. Research finds that single mothers, particularly those earning low wages, are more likely to be employed and therefore experience an increase in income when they receive EITC.

Implementation Strategies

Federal EITC benefits, state-level support of these federal benefits, and state-level supplemental EITCs have helped lift millions of working families and their children out of poverty. These are broad-reaching and effective policies for implementing the violence prevention strategy of improving economic supports to families.

Federal EITC Benefits

In 2015, over 27 million taxpayers claimed $67 billion in earned income tax credits in the form of a refundable tax break.

State-Level Support of Federal EITC

States and local governments can help improve their communities’ uptake of the federal EITC benefit. While the federal program reaches many, 20% of eligible tax filers do not claim and get EITC. The strategies listed below, especially increasing access and outreach, can help close the gap.

State-Level Supplemental EITC

Twenty-nine states and Washington, DC, have established state-level EITCs to supplement and extend the benefits of the federal EITC. Taxpayers in states with their own EITCs average a 17.6% match of the federal EITC benefit received. This additional income translates to state-level reductions in poverty, particularly reductions in child poverty rates. State EITCs have added more than $4 billion annually to the incomes of working families. Forty percent of individuals who receive the federal EITC live in a state that also administers a state-level EITC, leaving room for states to expand the reach of these credits.

Like the federal EITC, most state-level EITCs result in a tax refund even if the amount of the credit is greater than the amount of tax owed. The credit provides these families an increase in household income with which they can meet basic needs.

Outreach and Access

ITC-related policies have the most impact when eligible workers—especially working families—are (1) aware of the credits, and (2) have the information and support they need to take them. State and local government efforts can include media campaigns, educational resources, and links to opportunities for tax filing support. Officials can also utilize existing support service providers to share information about available benefits with potentially eligible residents.

Based on disaggregated data from both federal and state EITC programs that include funds for community outreach around the country, these outreach efforts support millions of working families to claim hundreds of millions of dollars in EITC credits.

The Centers for Disease Control and Prevention recognizes ChangeLab Solutions for their assistance in developing the Policy in Action for Preventing Child Abuse and Neglect content.