Expanding the EITC for Workers without Resident Children

Brief

Expanding the EITC for Workers without Resident Children

Abstract

The federal earned income tax credit (EITC) is a refundable tax credit that provides substantial cash benefits to low-income working families with children. Working adults without children at home— including noncustodial parents, who are considered “childless” for tax purposes—also face economic challenges but receive few EITC benefits.

This research brief and accompanying state fact sheets explore what would happen if the EITC for childless adults was expanded significantly. Through both national and state-level estimates, we show the number of workers who would become newly eligible for the EITC and the increase in EITC benefits for both currently and newly eligible workers.  Using Urban’s Analysis of Transfers, Taxes, and Income Security (ATTIS) microsimulation model with 2016 American Community Survey data, we modeled the following expansion of the childless EITC:

  • Tripling the maximum amount from $500 to $1,500 per year ($1,500 is about half the maximum amount a family with one child can receive).
  • Expanding eligibility to those earning up to $28,000/year ($34,000, if married), well above the current phase-out income of $15,000/year ($21,000, if married).
  • Reducing the minimum eligible age from 25 to 21.

In addition to increasing the federal EITC, this policy expansion would also result in an increase in state EITC benefits for workers in 22 states that calculate the state EITC as a percentage of the federal EITC. If states continue to conform to the federal EITC, workers in these states would qualify for an additional $1.4 billion in state EITC benefits under the expansion.

In summary, this policy expansion would result in:

  • A threefold increase in the number of workers who would qualify for the childless EITC: the number of workers who would receive the childless EITC would increase from 8 million to more than 24 million.
  • An average increase of roughly $1,000/year in EITC benefits for workers benefiting from the policy expansion.
  • A tenfold increase in the total amount of federal EITC available to childless workers: the current amount is $2.4 billion, and it would increase to more than $26 billion. 
  • An increase the number of noncustodial parents who qualify for the childless EITC from 780,000 to more than 2 million workers. Noncustodial parents who benefit from the policy expansion would receive an average increase of about $950 in EITC benefits.
  • Higher EITC benefits for millions of workers across many industries. The retail trade industry would have the most workers benefiting from the policy expansion. Millions of workers in accommodations and food services, health care, administrative and other services, construction, and manufacturing would also benefit.
  • A greater than threefold increase in the number of workers with a high school degree and some college who would qualify—from 2.6 million currently eligible to 9.0 million totally eligible under the policy expansion.

Learn more through our 50-state fact sheets to see how expanding the childless EITC would play out in all 50 states and the District of Columbia. 

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