The Impact of State EITC Policies and Practices on Participation Rates among Hispanic Families

The federal Earned Income Tax Credit (EITC) is the largest government-funded cash transfer program and is designed to help low- to moderate-income families support themselves and their children while also encouraging workforce participation. Many states also offer a state-level EITC, which is accessible through the same tax filing system as the federal EITC but may differ with respect to the amount of the credit, its refundability, and its eligibility requirements. The increased income supplied by the EITC is associated with improved child educational and health outcomes; however, estimates suggest that more than 20 percent of eligible taxpayers and 25 percent of eligible workers do not receive the credit, with noted disparities by race and ethnicity. Child Trends collaborated with Dr. Lisa Gennetian from the Duke Sanford Center for Child & Family to explore the extent to which variation in state-level EITC policies and outreach practices may be associated with federal EITC participation among eligible Hispanic families with children.

The study combined observed variation in state-level EITC policies and practices with data on EITC receipt from the Survey of Income and Program Participation to examine the following:

  1. Which individual and family factors are associated with the use of the federal EITC program among eligible Hispanic families with young children
  2. How state-level EITC policies and practices vary across dimensions that may be particularly salient for Hispanic families with young children
  3. How state-level variation in policies and practices influence the use of EITC by low-income eligible Hispanics, as compared to other racial/ethnic groups, thereby potentially contributing to racial/ethnic disparities in EITC use

The project concluded data collection and analysis in November 2020 and presented the findings and implications in a policy brief.

Project Team

Dana Thomson, PhD (PI)
Lisa A. Gennetian, PhD (Co-I)
Yiyu Chen
Hannah Barnett
Madeline Carter
Santiago Deambrosi

Funder

Robert Woods Johnson Foundation