The Earned Income Tax Credit (EITC), which provides a refundable credit to low-wage workers at tax time, has become one of the nation’s most effective antipoverty policies. But most of its benefits go to workers with children. The maximum credit for a worker with two children, for example, is almost $6,000. If there are no minor children in the household, the worker gets a tenth of that amount. This disparity means that a large number of workers with low incomes—more than 20 million people—benefit very little from the EITC. This group includes young women and men without children, older workers with adult children, and noncustodial parents (that is, parents who do not have custody of their children).

Numerous proposals over the years have come from both sides of the political spectrum to increase the credit for workers without dependent children—without success. That’s due in part to concerns that a more generous credit would cause some workers to reduce their work effort since the credit phases out as earnings increase. Although the EITC for childless workers was increased as part of the American Rescue Plan Act (ARPA) of 2021, which tripled the maximum benefit to $1,500, that expansion is set to expire in 2022 unless it is made a permanent part of the tax code.

Read the full article about the earned income tax credit by Cynthia Miller, Lawrence F. Katz and Adam Isen at MDRC.