Evidence of Impact for State Earned Income Tax Credit

Download PDF

A refundable state earned income tax credit of at least 10 percent of the federal credit is one of the five most effective policies a state can implement to ensure children get off to a healthy start and thrive, and that promote greater equity in child wellbeing.

The state earned income tax credit (EITC) is a tax credit for low-income workers, typically calculated as a percentage of the federal EITC. The value and administration of the state EITC is determined by each state, including whether the state credit is refundable (providing a refund to households even in the absence of tax liability).

The most rigorous research studies show that a state earned income tax credit:


Promotes healthy births

  • State EITCs led to increases in birthweight of between 16 grams to 104 grams, depending on the generosity level

Reduces racial disparities in birth outcomes

  • In states with generous, refundable credits, Black mothers saw the greatest reductions in low birthweight (up to 3,760 fewer babies born low birthweight annually)

Increases a family’s economic security

  • A $1,000 increase in the state and federal credit amount led to a $2,000 increase in annual pretax family earnings during ages 0 to 5
  • State EITCs boosted mothers’ annual wages by 32%

Boosts maternal labor force attachment

  • A 10% state EITC supplement increased employment among single mothers by 2.1 percentage points compared to single women with no children

Visit the Clearinghouse for the comprehensive evidence review on State Earned Income Tax Credit.

The prenatal period to age 3 is the most sensitive and rapid period of growth for the brain and body. State policy choices have a substantial impact on the wellbeing of infants, toddlers, and their parents, and on promoting equity among children. See the Prenatal-to-3 State Policy Roadmap for more information on the most effective policies and strategies states can implement to help children thrive from the start.

Have questions? Please contact us.