Implementing a Refundable State Earned Income Tax Credit in South Carolina: A Benefit-Cost Analysis

PRINT

Analysis created for the Institute for Child Success (ICS)

Research suggests that federal and state earned income tax credits (EITC) increase employment and earnings and improve families’ economic, social, and health outcomes. State EITCs can also increase tax revenue and reduce public assistance spending for federal and local governments.

Eligible tax filers in South Carolina can currently claim a nonrefundable state EITC, with a credit worth 125% of the federal credit beginning in tax year 2023. In this analysis, we estimate the additional costs and benefits to South Carolina of implementing a 10% or 25% refundable EITC, compared to the state’s 125% nonrefundable EITC.

We estimate that, with a 10% refundable state EITC, the average annual benefit per eligible household would be $265. Our analysis demonstrates that the annual public benefits of the elective refundable state EITC program would outweigh its costs, with an estimated ratio of about 10 to 1 with a 10% credit. The program could provide an improvement in the quality of life for workers and families in South Carolina, and a return to the state government through increased economic activity, greater tax revenue, and reduced spending on public assistance and human services programs.

Download the full report (PDF)

Download the 1-page research summary (PDF)

Recommended Citation

Osborne, C., Skatter, N., Thom, A. (2023). Implementing a Refundable State Earned Income Tax Credit in South Carolina: A Benefit-Cost Analysis. Prenatal-to-3 Policy Impact Center, Vanderbilt University Peabody College of Education and Human Development.

© March 2023, Prenatal-to-3 Policy Impact Center, All Rights Reserved. The Prenatal-to-3 Policy Impact Center at Peabody College of Education and Human Development, Vanderbilt University translates research on the best public investments into state policy actions that produce results for young children and society.

Related

State Policies to Promote Employer-Supported Child Care

Research suggests that the high cost of child care can lead many parents to limit their participation in the workforce, resulting in negative repercussions for families and the economy. Though increased public investment is needed

Approaches to Improving Early Educators’ Compensation

Early educators remain among the most underpaid workers in the nation despite playing a critical role in child development and enabling workforce participation for parents. Across the country, the median wage for early educators is

Partnering to Enhance Nashville’s Early Literacy Landscape with Nashville Public Library and the Begin Bright Program

TRANSFORMATIVE EARLY LITERACY INITIATIVE AIMS TO BUILD FOUNDATIONAL READING SKILLS IN CHILDREN FOR LONG-TERM SUCCESS.  Press Contact: Sydne Lewis, 615-343-9946, sydne.lewis@vanderbilt.edu The Prenatal-to-3 Policy Impact Center is proud to announce the launch of a comprehensive