The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) are effective anti-poverty measures that have helped millions of people across the United States pay for necessities and invest in their futures. Combined, the federal EITC and CTC lifted 10.6 million people, of which 5.5 million were children, above the Federal Poverty Level (FPL) in 2018. The tax credits also made 17.5 million more people, of which 6.4 million were children, less poor in the same year. These tax credits put money directly back into the pockets of working families, often allowing them to pay for basic needs like food, housing, and healthcare.
This brief provides an overview of these two tax credits and the benefits they provide to working families and the Rhode Island economy at large. Given that, in 2024, 68% of single adults in Rhode Island and 78% of single parents with two children were unable to meet their basic needs without assistance, policy measures like the EITC and CTC could go a long way to help meet the needs of working Rhode Islanders.
Between 2019 and 2023, 13% of children in Rhode Island lived in poverty, and those rates were much worse for children of color. According to Rhode Island Kids Count, 29% of American Indian and Alaskan Native children, 25% of Hispanic children, 24% of Black children, 7% of Asian/Pacific Islander children, and 7% of White children lived in poverty. Rhode Island needs to reduce its child poverty rates, and the EITC and CTC have been proven to do so very effectively.