STATE EARNED INCOME TAX CREDIT
WHAT IS AN EARNED INCOME TAX CREDIT AND WHY IS IT IMPORTANT?
The Federal EITC Is a Refundable Tax Credit for Low-Income Workers
Households with at least one working adult between the ages of 25 to 64 can receive the federal EITC either as a reduction in taxes owed or as a refund if the household has no federal tax liability (or if the credit value exceeds taxes owed).1 The amount of the federal EITC increases as a percentage of earned income until a plateau income range is reached, after which the credit amount decreases slowly as income continues to rise, until the credit phases out completely.2 The federal credit amount varies by family size, marital status, and income level, and is adjusted annually for inflation.
The State EITC Is an Additional Credit Often Based on a Percentage of the Federal EITC
For the 33 states with an EITC, the state credit is typically calculated as a percentage of the federal EITC, though four states have unique credit structures.3 The value and administration of the state EITC is determined by each state, including whether the credit is refundable or nonrefundable. States most often finance their state EITCs through general revenue, and a few use TANF funds.4
The EITC Helps Millions of Workers Each Year, but Working Parents Benefit the Most
In 2024, 24 million workers and families received about $70 billion in federal EITC benefits.5 Most recipients of the federal and state EITCs are parents with children. Because many families with low incomes are headed by working single mothers and women of color, the EITC is expected to improve outcomes for these families more than for other families.6
A small credit is available to working individuals without dependents and to noncustodial parents, but it is harder to qualify for the EITC as an adult without custodial children because income limits are set much lower. As a result, over 95% of EITC benefits go to families with children in the home, including many single-parent families.7
The EITC Lifts Millions of Families Out of Poverty
The federal EITC lifts up to 6 million people out of poverty in a given year, including 3 million children.8,2 The average federal EITC amount received per tax filer was $2,894 in 2024.9 The average state EITC receipt is not reported in a central national source, as a result of differences in administration across states, but a 2021 study found that the average state amount was $265.10 That amount represents over 90% of a 40-hour week’s salary at the federal minimum wage of $7.25 per hour. In tax year 2026, the maximum value of a state EITC equal to 10% of the federal EITC would be worth $443 for a family with one child, $732 for a family with two children, and $823 for a family with three or more children.
Research finds that administrative costs of the federal EITC are relatively low compared to programs such as the Supplemental Nutrition Assistance Program (SNAP) and Temporary Assistance for Needy Families (TANF). Given that most state credits are a percentage of the federal credit, administrative costs for states are also comparatively low which makes EITCs one of the most cost-effective anti-poverty policies in the US.11
Search the Prenatal-to-3 Policy Clearinghouse for an ongoing inventory of rigorous evidence reviews, including more information on the state earned income tax credit.
WHAT IMPACT DOES A STATE EITC HAVE AND FOR WHOM?
A refundable state EITC of at least 10% of the federal EITC promotes healthier and more equitable birth outcomes, increases parents’ workforce participation, and improves household economic security, with the greatest effects for single mothers and their children. The 10% threshold is based on comprehensive reviews of available rigorous causal studies. Additional research is needed to understand the impact of more generous credits.
The State EITC Reduces Racial Disparities in Birth Outcomes, but State Policy Choices Could Increase Access and Further Improve Equity
Rigorous research shows that the state EITC can reduce racial disparities in birth outcomes12 and poverty rates.13 In one study, Black mothers in states with an EITC saw greater reductions in the likelihood of low birthweight for their infants (compared to states without an EITC) than did White mothers. Given pre-existing disparities in healthy births between Black mothers and mothers of other races, this result demonstrates the potential for the EITC to promote better health outcomes among Black infants.12
However, uptake of the EITC among those who are eligible is not equal across racial and ethnic groups, and differences in access may prevent the credit from promoting equity in family outcomes. For example, research demonstrates that eligible Hispanic families have lower EITC uptake rates than families of other races and ethnicities.14 Some scholars suggest that Hispanic families may face language or administrative barriers or may fear immigration enforcement, and these factors may deter uptake even when families are fully eligible.15
As a step toward reducing these barriers, 11 states (California, Colorado, the District of Columbia, Illinois, Maine, Maryland, Minnesota, New Mexico, Oregon, Vermont, and Washington) currently extend EITC eligibility to filers with an Individual Taxpayer Identification Number (ITIN), which means that taxpayers who are undocumented or otherwise ineligible for a Social Security number (SSN) may still claim EITC benefits.
Additionally, eight states (California, Colorado, Illinois, Maine, Maryland, Minnesota, New Jersey, and New Mexico) currently provide EITC benefits to younger (ages 18 to 24) filers, and three states (California, Illinois, and New Jersey) extend eligibility to older (aged 65 and older) filers without qualifying dependents. The District of Columbia and New York also allow noncustodial parents to claim the credit.
State decisions such as offering the credit to immigrants of various legal statuses or workers of younger or older age ranges, conducting greater tax preparation outreach, and ensuring greater access for noncustodial parents may increase equitable access to the EITC and improve outcomes for more children and families.16
For more information on what we know and what we still need to learn about the state earned income tax credit, see the evidence review on the state earned income tax credit.
WHAT PROGRESS HAVE STATES MADE IN THE LAST YEAR TO ADOPT AND FULLY IMPLEMENT A REFUNDABLE STATE EITC OF AT LEAST 10%?
Pennsylvania Began Implementing a Refundable EITC Worth 10% of the Federal EITC in Tax Year 2025
In the last year, one state—Pennsylvania—began newly implementing a refundable state EITC of at least 10% of the federal credit. Pennsylvania enacted budget legislation in November of 2025 that included a state EITC, called the Working Pennsylvanians Tax Credit. The credit is refundable and equal to 10% of the federal EITC. Families were able to claim the credit beginning in tax year 2025 (on tax returns filed beginning in January 2026).
With the addition of Pennsylvania, 24 states now fully implement a refundable state EITC worth at least 10% of the federal credit as of tax year 2026.
22 States Introduced Legislation in the Last Year to Create or Expand a State EITC
In the past year, 22 states introduced legislation to establish or expand a state EITC. States considered legislation to establish new credits, increase the value of existing credits, implement or expand the refundability of existing credits, or to expand eligibility for credits, but only five states (the District of Columbia, Oregon, Pennsylvania, Virginia, and Washington) successfully enacted policy changes.
4 States Considered Establishing New Credits
Beyond Pennsylvania, four states without an existing state EITC (Florida, Georgia, Mississippi, and North Carolina) introduced legislation to establish a state EITC in the past year.
Each of the four states introduced at least one bill that would meet the threshold of refundable and worth at least 10% of the federal credit. Legislators in Florida and Georgia introduced bills to create refundable EITCs worth 20% of the federal EITC. Notably, Florida does not have a state income tax, which is the typical mechanism used to fund and administer state EITCs. Therefore, Florida would have offered its state EITC as a rebate on other state taxes.
Mississippi legislators proposed several bills to establish a refundable state EITC of 5%, 10%, and 20% of the federal credit. Additionally, North Carolina, which previously implemented a refundable state EITC worth 5% of the federal credit before eliminating it in tax year 2014, introduced several proposals to reinstate its credit. Like Mississippi, proposals in North Carolina would have established a credit equal to 5%, 10%, and 20% of the federal EITC.
4 States Implemented Value Increases, 8 Other States Considered Increases
In December 2025, the District of Columbia enacted two bills to increase the value of the state refundable EITC from 85% to 100% of the federal credit beginning in tax year 2025. Due to the Home Rule Act, however, this legislation was subject to Congressional approval. Following a Congressional resolution repealing one of the two bills and a subsequent legal opinion by the District of Columbia’s Attorney General, the District proceeded with implementing an expanded credit for tax year 2025, but not 2026. Families were eligible for a state EITC of 100% of the federal credit in tax year 2025 and will receive 85% of the federal credit in tax year 2026.
Oregon also enacted legislation to increase the value of the refundable state EITC. Prior to this legislation, the credit was set to revert from 12% to 11% of the federal credit for families with children under age 3, and from 9% to 8% for other filers in tax year 2026. Legislators enacted one bill to repeal the sunset of the increased credit value, and a second bill to further increase the value. Beginning in tax year 2026, families with children under the age of 3 will receive a refundable credit equal to 17% of the federal EITC, and other filers will receive a credit equal to 14% of the federal credit.
Additionally, Montana implemented a previously enacted increase to the value of its state EITC from 10% in tax year 2025 to 20% in tax year 2026. Vermont also implemented a previously enacted increase for workers without qualifying dependents, from 38% to 100% of the federal credit in tax year 2026.
An additional eight states (Hawaii, Illinois, Kansas, Massachusetts, New Jersey, New Mexico, Rhode Island, and Wisconsin) introduced legislation to increase the value of their existing state EITCs, but the bills did not pass. All of these states already provide refundable credits worth at least 10% of the federal EITC except Wisconsin; if passed, the state’s legislation would have put the credit over this threshold.
1 State Expanded the Refundability of the State EITC, and 3 Others Considered Implementing or Expanding Refundability
Four states (Missouri, Ohio, South Carolina, and Virginia) with existing EITCs introduced legislation to implement or expand the refundability of their credits, though only Virginia enacted legislation to do so. Previously, families in Virginia were able to claim either a refundable state EITC equal to 15% of the federal credit, or a nonrefundable state EITC equal to 20% of the federal credit. Legislation enacted last year temporarily increased the value of the refundable option from 15% to 20% of the federal credit for tax years 2025 and 2026, making the credit fully refundable. This year, the state budget extended full refundability of the credit until tax year 2030.
Missouri legislators introduced a bill that would have made its nonrefundable credit, equal to 20% of the federal EITC, fully refundable. A proposal in Ohio would make the current nonrefundable credit, equal to 30% of the federal EITC, partially refundable. The bill would decrease the value of the nonrefundable credit to 20% of the federal EITC and create an additional refundable state EITC equal to 10% of the federal credit. Families would be able to claim both credits.
Legislation proposed in South Carolina would have created a refundable state EITC that families could claim in addition to the current nonrefundable credit. The new refundable credit would have been worth 10% of the federal EITC, capped initially at $50, increasing to $400 after 2 years. This refundable option would have allowed low-income families (with no tax liabilities) to claim the state EITC for the first time.
2 States Expanded Eligibility for the State EITC, and 4 Other States Considered Eligibility Expansions
This session, two states, Oregon and Washington, enacted legislation to expand eligibility for their state EITC to one or more additional populations. Previously, Oregon had temporarily extended eligibility to ITIN filers for tax years 2020 through 2025. Legislation enacted this year repealed the 2025 sunset, making ITIN filers permanently eligible for the credit.
Legislators in Washington enacted the state’s first income tax bill that included expanded eligibility for the state EITC. Beginning in tax year 2029, eligibility for the credit will be extended to younger filers ages 18 to 24 and older filers aged 65 and older without dependents. The bill also expands income eligibility for the credit beyond that of the federal EITC. Eligibility will be calculated using the State Need Standard, a state measure of the cost of living to include additional families with annual earnings above the federal threshold. For a single parent with one child, the maximum eligible income will increase from $57,310 to $72,528.21
Additionally, four states (Colorado, Maryland, Massachusetts, and New Jersey) considered expanding eligibility for the state EITC. Legislators in Colorado sought to expand eligibility to filers aged 65 and older. Massachusetts legislators considered expanding eligibility to younger filers aged 18 to 24, older filers aged 65 and older, ITIN filers, and individuals who would otherwise be eligible for the state EITC but for the fact that they do not have an ITIN or Social Security number.
New Jersey legislators introduced bills to make ITIN filers and survivors of domestic abuse who are married but filing separately eligible for the credit. Finally, Maryland legislators attempted to expand eligibility to additional families with higher incomes and without qualifying dependents. The proposal would have expanded the incomes for which families without children could claim the state credit beyond the income limits for the federal credit. None of these bills passed this session.
For more information on the state policy levers to help maximize the effectiveness of a state EITC see our State Policy Lever Checklists.
1 State Enacted Legislation to Reduce the State EITC, and 5 Others Considered Eliminating Their State EITC
Alternatively, six states (Connecticut, Iowa, Missouri, South Carolina, Utah, and Vermont) considered regressive action on their state EITCs this year. Legislators in South Carolina enacted a bill to cap the value of the nonrefundable state EITC (125% of the federal credit) at $200 for all filers. This reduction was part of broader tax legislation that also decreased the state income tax rate. Lawmakers in Connecticut, Iowa, Missouri, Utah, and Vermont introduced bills to eliminate their state EITCs, though the state EITC provision in Utah’s legislation was removed in amendments. None of these bills passed this session.
Additionally, though not legislated, families in Colorado will receive a reduced state EITC in tax year 2026. Current statute sets Colorado’s state EITC at a minimum amount each year and allows the credit to expand up to 50% of the federal credit if revenue projections exceed a certain threshold. Last year, families received up to the full 50% of the federal credit, depending on eligibility. This year, revenue projections did not trigger the expanded state EITC, so families will only receive the minimum amount, which is 25% of the federal credit.
For more information on each state’s progress on state EITCs, find our individual state summaries under Additional Resources below (and here).
HOW DOES THE STATE EITC VARY ACROSS STATES?
EITC Value, Refundability, and Eligibility Varies Across States
For tax year 2026, the value of refundable state EITCs for families with children range from 4% of the federal credit for families with one child in Wisconsin to 85% in the District of Columbia. Of the 29 states that have a refundable state EITC, five states (Delaware, Louisiana, Minnesota, Oklahoma, and Wisconsin) have credits that, for at least some families with children, are below the threshold of 10% of the federal credit, which research shows is the minimum percentage that is necessary to impact family wellbeing.
Four states (California, Connecticut, Minnesota, and Washington) have refundable EITCs that are not based entirely on a percentage of the federal credit. To compare the value of these states’ credits to other states, we calculated the value of the state credit as a percent of the federal credit for a taxpayer with one dependent whose income is $13,020. This income level aligns with the lowest income necessary to receive the maximum federal credit.
California’s refundable credit varies depending on income. The CalEITC has different income thresholds (for both the phase-in and phase-out) than the federal EITC, which makes California’s credit more generous for families with incomes too low to receive the maximum value of the federal EITC and less generous for some families that receive the maximum value of the federal EITC. In California, the very lowest income households receive 85% of the federal EITC for their income level, but families with one dependent earning $13,020 annually22 receive approximately 14% of the federal credit. Connecticut’s credit is calculated as 40% of the federal EITC, plus an additional $250 provided to families with children. Families with one dependent earning $13,020 annually receive approximately 46% of the federal credit.
Minnesota’s refundable EITC is based on a percentage of income and does not vary by number of dependents. Tax filers with one dependent earning $13,020 annually receive approximately 9% of the federal credit. Because Washington does not have a state income tax, the refundable EITC, called the Working Families Tax Credit, provides a tax rebate between $50 and $1,330 depending on the number of dependents. The state credit is equivalent to 15% of the federal EITC for families with one dependent earning $13,020 annually. Washington is the only state without a state income tax currently implementing an EITC.
Two other states have refundable EITCs that are based on the federal credit, but the value of the state credit varies based on household characteristics. Oregon’s refundable EITC is 17% of the federal credit for families with children under age 3 and 14% for all other filers, and in Wisconsin, the percentage of the federal credit increases from 4% for one child to 34% for three or more children.
Colorado’s refundable state EITC varies based on the state’s projected revenue for the tax year. During the 2024 legislative session, lawmakers set the minimum value of the credit at 35% of the federal EITC for tax year 2025 and 25% for tax year 2026 but permitted the credit to remain up to 50% of the federal credit if revenues allowed. Based on forecasts for tax year 2026, the expanded state EITC is not available and families will receive the minimum credit value of 25% of the federal credit.
Currently, only four states (Missouri, Ohio, South Carolina, and Utah) have a nonrefundable state EITC. The highest nonrefundable EITC rate is 125% of the federal credit in South Carolina, but the value of this credit is capped at $200 for all filers beginning in tax year 2026. Of the 18 states that do not have a state EITC, eight states have no state income tax, the typical mechanism used to finance and provide administrative structure for a state EITC.
States also vary in the additional populations who are eligible for the credit. Eleven states currently offer EITCs to workers with an ITIN, and eight states currently expand eligibility for their state credits to younger tax filers (ages 18 to 24). California, Illinois, and New Jersey also offer the credit to workers who are aged 65 and older without dependents. Beginning in tax year 2029, Washington will also expand eligibility to younger and older filers. Only the District of Columbia and New York currently offer the same credits for both custodial and noncustodial parents.
Massachusetts and Washington also extend eligibility to taxpayers who file as “married filing separately,” distinct from federal eligibility for this population. This expanded eligibility may benefit individuals who have separated from a partner after experiencing domestic violence.
States also vary in how they fund their credit. For example, Washington does not have a state income tax, therefore state leaders draw from other retail and use tax revenues to provide the state EITC, called the Working Families Tax Credit.19
View our Policy Impact Calculator, which illustrates how policies, such as state minimum wage, paid family and medical leave, out-of-pocket child care expenses, taxes and tax credits, as well as federal nutrition benefits, interact to impact overall household resources.
HOW ARE STATES IMPLEMENTING OTHER TAX CREDITS, SUCH AS THE CHILD TAX CREDIT?
States may also implement other tax credits for families, such as a child tax credit (CTC), to reduce taxpayers’ liability and provide a refund. In recent years, many states have created and expanded state-level CTCs, often in addition to state EITCs, to further support families with children.
Although distinct credits, taxpayers typically receive these benefits as one payment—for example, if entitled to a refund, a taxpayer receives one lump-sum refund, perhaps partially due to the EITC and partially due to other credits; these amounts are often indistinguishable to the recipient at that time.
As of September 2026, 16 states have implemented a state CTC and Rhode Island will implement its newly enacted refundable credit in tax year 2027. All but two of the states that are currently implementing a CTC (Arizona and Georgia) also provide a state EITC. In most states with both an EITC and a CTC, the credits were enacted independently and are calculated separately.
Minnesota, however, revised the structure of the state’s existing EITC when adopting a state CTC in 2023. In doing so, the state reduced the value of the state EITC and tied the two credits, so the value of the combined credits is phased down jointly as income increases. This structural change resulted in families with children receiving substantially more in total credits. Additionally, Illinois’s state CTC is calculated as percentage of the state EITC, unlike most states which set state CTCs as a fixed per-child credit.
Because of the differences in how most state CTCs and state EITCs are structured, states may design CTCs to target different families than state EITCs, such as families with little to no earned income who are ineligible for or receive a small credit from the EITC.
State CTCs Are Promising But Additional Research Is Needed
In the wake of the success of the temporary expansion of the federal CTC in 2021, which lifted an estimated 2.1 million children out of poverty, state CTCs have become increasingly popular.17 Although research has not yet caught up with the pace of policy, early findings and research on the temporary expansion of the federal credit indicate that state CTCs are a promising means to support child and family outcomes.
A rigorous study on child maltreatment found the implementation of a state CTC decreased neglect reports among Black and Hispanic children, and physical abuse reports among Black children. However, state CTCs did not reduce neglect reports for White children or children overall, or physical abuse reports for White or Hispanic children, or children overall.18
Research also shows that the temporary modifications to the federal CTC, through the American Rescue Plan Act, which provided up to $3,600 annually for each child ages birth to 5, reduced food insecurity and improved parents’ mental health.19,20
For more information on the temporary expansion of the federal CTC, see the evidence review on the cash transfers and our research brief on promising evidence on state CTCs.
As states continue to implement and expand credits, further causal research is needed to establish the impacts of state CTCs on additional child and family outcomes, and to determine the optimal value of the credit to achieve beneficial outcomes.
State CTC Value, Refundability, and Eligibility Varies Across States
Similar to state EITCs, state CTCs can be refundable or nonrefundable. As of tax year 2026, 12 states have implemented a refundable state CTC and four states have implemented a nonrefundable state CTC. Rhode Island will begin implementing a refundable state CTC in tax year 2027.
Unlike state EITCs, few state CTCs are calculated as a percentage of the federal CTC and are instead provided as a per-child credit that may be phased down as income increases. Illinois and Oklahoma are the only states that calculate their state CTCs as a percentage of another state or federal credit. Oklahoma bases its credit, in part, on the federal child tax credit, and Illinois’s credit is based on its state EITC.
Unlike state EITCs, which are indexed to inflation because the federal credit is, state CTCs are not adjusted based on cost of living unless explicitly required in legislation. Although the federal credit is available for children under age 17, many states target their CTCs only to younger children.
Over the past several years, the maximum value of credits has increased. For many years, New York provided the most generous credit, which maxed out at approximately $330 per child. As of tax year 2026, Minnesota offers the most generous credit, at $1,800 per child. When revenue projections allow, Colorado offers a second state CTC, called the Family Affordability Tax Credit (FATC), that provided up to an additional $3,273 per child in tax year 2025.
Income eligibility limits and phase out structures impact which families within a state receive the full value of the credit. For example, in Oregon, only families with incomes below $26,550 are eligible for the full value of the credit, and families with incomes above $31,550 receive no credit. In Georgia and Massachusetts, by contrast, all families, regardless of income, receive the full value of the credit.
11 States Without Existing CTCs Introduced, and 1 Enacted, New State CTCs This Session
Over the past year, 11 states without an existing state CTC (Connecticut, the District of Columbia, Indiana, Kentucky, Mississippi, Missouri, North Carolina, Rhode Island, South Carolina, West Virginia, and Virginia) introduced legislation to establish one.
This year, as part of the annual state budget, Rhode Island enacted a refundable state CTC worth up to $330 per child. The credit, available to families with children aged 18 and under, will be the first in the country to be inclusive of 18 year olds. Families will be able to claim the credit beginning in tax year 2027.
The District of Columbia also passed CTC legislation in the last year, though the credit will not go into effect. Enacted in December 2025, the legislation would have created a refundable state CTC of up to $1,000 per child under the age of 18, effective tax year 2026. The legislation would have also increased the value of the state EITC. However, Congress enacted a resolution to repeal this legislation. Due to this congressional action, and because the original legislation was temporary, the credit will no longer go into effect. This is the second time a state CTC has been enacted and repealed in the District of Columbia: the budget enacted last year repealed a refundable state CTC worth up to $420 per child under age 6 that was set to go into effect in tax year 2025.
Though not considered a state CTC, legislators in Wisconsin enacted a bill this year to create a tax credit for individuals who experience a stillbirth in the tax year. The credit is nonrefundable and worth $2,000, available to families beginning in tax year 2026.
In addition to state CTC proposals for families with children up to age 17, legislators in Virginia also considered establishing a newborn tax credit. The legislation would have provided a refundable credit equal to $2,000 per newborn to married individuals. Though not included in the enacted bill, Rhode Island legislators also considered replacing the state’s existing dependent exemption with a refundable CTC, a strategy that would have reduced the cost of the credit while allowing low-income families (with no tax liabilities) to receive relief not previously provided by the deduction.
1 State With an Existing CTC Enacted an Additional Credit, and 4 Others Considered Additional Credits
In Colorado, legislators enacted a bill to create an additional state CTC, called the Family Affordability Credit (FAC). The FAC mirrors eligibility for the state’s existing Family Affordability Tax Credit (FATC) but will be smaller in value and will not rely on revenue triggers to make the credit available each year, as the FATC does. Families will be able to claim the credit beginning in tax year 2027, in addition to the state CTC and FATC.
This session, four additional states (Illinois, New Jersey, New Mexico, and Oklahoma) that have existing state CTCs introduced legislation to establish additional credits, though the bills have not passed as of September 2026. Illinois introduced an additional refundable credit, called the Child Care Tax Credit, equal to 25% of the federal CTC. Legislators in New Jersey also introduced an additional refundable state CTC for families earning up to 250% of the federal poverty level. The credit would be worth up to $582 per dependent, available to families with dependents up to age 25.
A bill was introduced in New Mexico which would have created an additional refundable state CTC worth $1,000 per month. To have been eligible for the credit, families must have had a child under 6 who was cared for at home, and not enrolled in a child care or pre-kindergarten program. Finally, a proposal in Oklahoma would have created a nonrefundable state CTC worth up to $1,000 per child under the age of 18. To have been eligible for the credit, households must have included a married mother and father with a biological child of both parents.
2 States Enacted Legislation to Increase the Value of Their State CTCs, and 6 Others Considered Increases
As part of their state budgets, legislators in Arizona and New Jersey increased the value of their state CTCs. In Arizona, the enacted state budget increased the value of the nonrefundable credit from $100 to $125 per child beginning in tax year 2026. Legislators in New Jersey temporarily increased the value of the refundable state CTC as part of the state budget agreement. For tax years 2026 through 2028, the maximum credit increased from $1,000 to $1,250 per child.
Six other states with existing credits (Georgia, Illinois, Massachusetts, Minnesota, New York, and Oklahoma) introduced legislation to increase the value of their state CTCs, though the bills have not passed as of September 2026. Legislators in Georgia introduced a bill to increase the credit from $250 to $1,250 per child. The legislation would have also made the credit refundable and established a state EITC.
A proposal in Illinois would eliminate the phase-in of the state CTC and increase the value for lower income families. The state CTC is based on the state EITC, which uses the phase-in of the federal EITC. The bill would allow families to receive the maximum value of the credit with their first dollar of earnings, increasing the credit value for families earning less than the federal EITC threshold. For families with earnings at or above the threshold, the credit would remain at 40% of the state EITC received.
In Massachusetts, legislators considered a bill that would increase the value of the state CTC from $440 to $600 per child, index the value of the credit to inflation, and allow for advanced payments of the credit. Minnesota legislators introduced multiple bills to increase the value of the state CTC from the current value of $1,800 to $2,000 per child. In New York, legislation was introduced to gradually increase the maximum value of the state CTC from $1,000 to $1,500 per child. The bill would have also allowed for advanced payments of the credit.
Oklahoma legislators proposed replacing the existing state CTC with a higher value, refundable credit. The state’s current CTC is nonrefundable and worth the greater of 5% of the federal CTC or 20% of the federal child and dependent care tax credit (CDCTC). Legislation introduced this session would have removed the option of 5% of the federal CTC from the existing credit and established a separate, refundable state CTC worth up to $500 per child under the age of 19.
Additionally, New York implemented a previously enacted increase to the state CTC. In tax years 2026 and 2027, children between the ages of 4 and 17 are eligible for a credit worth up to $500, an increase from the $330 credit they were eligible for in tax year 2025. This is part of a temporary increase in credit value. After tax year 2027, the credit will revert to either $100 per child or 33% of the federal CTC as it was provided in 2017, whichever is greater. Families with a child under age 4 still receive a maximum credit of $1,000 per child.
1 State Expanded Eligibility for the State CTC, and 5 Other States Considered Expansions
Six states (California, Massachusetts, New Jersey, New York, Oklahoma, and Utah) introduced legislation to expand eligibility for their existing CTCs to additional families either by expanding age eligibility or income eligibility for their credits. Only Utah enacted a bill to do so.
Utah legislators enacted an expansion of income eligibility for the state CTC. The bill increased the income phase-out thresholds from $43,000 to $49,000 for families filing as single or head of household, and from $54,000 to $61,000 for families filing jointly.
In Massachusetts, legislators considered extending eligibility for the state CTC to individuals who would otherwise be eligible for the state CTC but for the fact that they do not have an ITIN or Social Security number. A California proposal would have gradually increased child age eligibility to children ages 6 to 17. Similarly, there were multiple bills introduced in New Jersey to expand child age eligibility to children ages 6 to 11 and ages 6 to 17. Two of these bills would also expand income eligibility for the credit.
New York legislators considered expanding age eligibility for the credit to include children aged 17. Finally, legislators in Oklahoma considered two eligibility expansions. One bill introduced would have expanded child age eligibility to include children ages 17 and 18. A second bill would have extended eligibility for the state CTC to include individuals who experience a stillbirth in the tax year. These families would be eligible to receive 5% of the federal CTC that they would have been eligible for based on their annual earnings.
2 State Credits Are No Longer in Effect This Year
Families in two states—Colorado and Idaho—will receive less tax relief in tax year 2026 compared to credits available in tax year 2025. Idaho’s nonrefundable state CTC, which was initially implemented in tax year 2018, expired on January 1, 2026. Although legislators considered two bills this session to repeal the expiration of the credit, neither of them passed.
Additionally, in Colorado, families will not be able to claim the state’s Family Affordability Tax Credit (FATC) this year. The FATC is a refundable state credit that families can claim in addition to the state CTC. The credit operates on a revenue trigger, which only allows the credit to be available if revenue projections exceed a certain threshold. In tax year 2026, revenue projections do not meet this threshold, so the credit is not available to families. Last year, families were able to claim up to $3,273 per child from the FATC.
View our Policy Impact Calculator, which illustrates how policies, such as state minimum wage, paid family and medical leave, out-of-pocket child care expenses, taxes and tax credits, as well as federal nutrition benefits, interact to impact overall household resources.
ADDITIONAL RESOURCES
View a summary of state EITC policies across states here. (PDF, Coming Soon)
NOTES AND SOURCES
- Tax Policy Center. Urban Institute & Brookings Institution. (2021). What is the earned income tax credit? https://www.taxpolicycenter.org/briefing-book/what-earned-income-tax-credit
- Center on Budget and Policy Priorities. (2019). Policy basics: The earned income tax credit. https://www.cbpp.org/sites/default/files/atoms/files/policybasics-eitc.pdf
- California, Minnesota, and Washington have unique structures distinct from that of the federal credit.
- Center on Budget and Policy Priorities. (2019). Policy basics: The earned income tax credit. https://www.cbpp.org/sites/default/files/atoms/files/policybasics-eitc.pdf
- Internal Revenue Service (2026). Statistics for tax returns with the Earned Income Tax Credit (EITC). https://www.irs.gov/tax-professionals/eitc-central/statistics-for-tax-returns-with-the-earned-income-tax-credit-eitc https://www.eitc.irs.gov/partner-toolkit/basic-marketing-communication-materials/eitc-fast-facts/eitc-fast-facts
- National Center for Children in Poverty. (n.d.). United States: Demographics of low-income children. http://www.nccp.org/profiles/US_profile_6.html
- USAFacts. (n.d.). Who receives the Earned Income Tax Credit? https://media.usafacts.org/m/1e429b34385894f7/original/Earned-Income-Tax-Credit_USAFactsTaxes.pd
- Maag, E. & Airi, N. (2021). Options to increase the EITC for workers without children at home. Tax Policy Center (Urban Institute & Brookings Institution). https://www.urban.org/sites/default/files/publication/103594/options-to-increase-the-eitc-for-workers-without-children-at-home.pdf
- Internal Revenue Service (2026). Statistics for tax returns with the Earned Income Tax Credit (EITC). https://www.irs.gov/tax-professionals/eitc-central/statistics-for-tax-returns-with-the-earned-income-tax-credit-eitc
- Collin, D., Shields-Zeeman, L., Batra, A., White, J., Tong, M., & Hamad, R. (2021). The effects of state earned income tax credits on mental health and health behaviors: A quasi-experimental study. Social Science & Medicine, 276, 1-7. https://doi.org/10.1016/j.socscimed.2020.113274 [State EITC Evidence Review Study QQ]
- Williams, E., Waxman, S., & Legendre, J. (2020). States can adopt or expand earned income tax credits to build a stronger future economy. Center on Budget and Policy Priorities. https://www.cbpp.org/research/state-budget-and-tax/states-can-adopt-or-expand-earned-income-tax-credits-to-build-a
- Komro, K. A., Markowitz, S., Livingston, M. D., & Wagenaar, A. C. (2019). Effects of state-level earned income tax credit laws on birth outcomes by race and ethnicity. Health Equity, 3(1), 61–67. https://doi.org/10.1089/heq.2018.0061 [State EITC Evidence Review Study II]
- National Academies of Sciences, Engineering, and Medicine. (2019). A roadmap to reducing child poverty. Washington, DC: The National Academies Press. https://doi.org/10.17226/25246. [State EITC Evidence Review Study ZZ]
- Thomson, D., Gennetian, L., Chen, Y., Barnett, H., Carter, M., & Deambrosi, S. (2020). State policy and practice related to earned income tax credits may affect receipt among Hispanic families with children. Child Trends. https://www.childtrends.org/publications/state-policy-and-practice-related-to-earned-income-tax-credits-may-affect-receipt-among-hispanic-families-with-children
- Goldin, J. & Liscow, Z. Tax benefit complexity and take-up: Lessons from the earned income tax credit. 72 Tax Law Review 59 (2018). https://law.stanford.edu/publications/tax-benefit-complexity-take-lessons-earned-income-tax-credit/
- The Rockefeller Foundation. (2021). Thirteen-year effort to implement a Working Families Tax Credit ends in success. https://www.rockefellerfoundation.org/case-study/thirteen-year-effort-to-implement-a-working-families-tax-credit-ends-in-success/
- Burns, K. & Fox, L. (2023). The Impact of the 2021 Expanded Child Tax Credit on Child Poverty. United States Census Bureau. https://www.census.gov/library/working-papers/2022/demo/SEHSD-wp2022-24.html
Piña, G., Moore, K., Mihalec-Adkins, B., Darling, K., Abdi, F., & Liehr, A. (2024). State policy levers for reducing early childhood maltreatment: The importance of family planning and economic support policies. Child Maltreatment. Advance online publication. https://doi.org/10.1177/10775595241267236
- Shafer PR, Gutiérrez KM, Ettinger de Cuba S, Bovell-Ammon A, Raifman J. (2022). Association of the Implementation of Child Tax Credit Advance Payments With Food Insufficiency in US Households. JAMA Netw Open. http://doi.org/10.1001/jamanetworkopen.2021.43296
- Batra, A., Jackson, K., & Hamad, R. (2023). Effects of the 2021 Expanded Child Tax Credit on Adults’ Mental Health: A Quasi-Experimental Study. Health Affairs 42, No. 1. https://doi.org/10.1377/hlthaff.2022.00733
- Yeung, T. & Reynolds, L. (2026, March 17). The Millionaires Tax significantly expands the Working Families Tax Credit. Washington State Budget & Policy Center. Retrieved on June 5, 2026, from https://budgetandpolicy.org/schmudget/the-millionaires-tax-significantly-expands-the-working-families-tax-credit/
- For states with EITCs that are structured separately from the federal credit, an annual income of $13,020 is used to calculate the value of the state EITC as a percentage of the federal credit. These earnings align with the lowest income necessary to receive the maximum federal EITC in tax year 2026.
