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.1 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 2022, 61% of single adults in Rhode Island and 70% of single parents were unable to meet their basic needs with wage and salary income alone, policy measures like the EITC and CTC could go a long way if expanded to meet the needs of working individuals.
This report was made possible through the Earned Income Tax Credit Rapid Response Fund (Fund) to support state tax credits policy work. The EITC Pooled Fund, a joint project of Economic Opportunity Funders and the Tax Equity Funders Network, was launched in 2012 to promote tax fairness and economic opportunity for low-income workers and families through the promotion, protection, and expansion of the federal and state EITCs, CTCs, and other tax credits.