Tax Credit Fairness for Working Families

Earned Income Tax Credit (EITC)

The EITC is a benefit for working individuals and families with low to moderate income that reduces the amount of taxes they owe and may even provide them with a refund. It is a tax policy critical in reducing the financial burden of low-income families and has the potential to decrease food insecurity and increase health through shifting income towards spending on healthy meals and necessary medical care.

Child and Family Tax Credit (CFTC)

The CFTC combines prior dependent credits into a single, streamlined refundable tax credit for families with children under age 13, disabled dependents, senior dependents 65+, and/or spouses who are unable to care for themselves. The credit is worth $310 per dependent in tax year 2023 and $440 per dependent in tax year 2024. The credit is universal (no income minimum), inclusive of immigrants who file taxes using an ITIN, and does not have a cap on the number of dependents who can be claimed.

Access the Tax Credits and Free Tax Prep Now

Volunteer Income Tax Assistance (VITA) sites across the state provide free tax preparation through IRS-certified volunteers.  They will ensure you access the tax credits you deserve!

MASSCAP Tax Coalition

Boston Tax Help Coalition

Current Policy Priorities

Extend eligibility for the EITC to immigrants who file taxes with an Individual Tax Identification Number (ITIN)
Despite paying taxes, immigrant workers who pay and file taxes using an ITIN are excluded from claiming the EITC. Extending eligibility would further the equity impact of the credit and create consistency in MA refundable family tax credits. It would also position the state in line with D.C. and nine states – including our New England neighbors Maine and Vermont – that include ITIN filers in state EITCs.

Remove the dependent cap in the EITC
Currently, the value of the EITC increases with family size, but only up to three children. Holding all else equal, a family with two children will receive the same credit as a family with four children. This unfairly penalizes larger families. For all households eligible for the EITC, the match should increase by 5 percentage points for each child above three children. This would mean a 5% increase for a household with four children, a 10% increase for a household with five, and so on.

Improve access to refundable family tax credits through sustained funding for the Volunteer Income Tax Assistance (VITA) program and a robust communications and outreach campaign.
In Massachusetts, 20% of families eligible for the EITC do not claim the credit. Sustained VITA funding and a widely disseminated outreach and communication campaign on refundable tax credits would ensure that more households receive the credit. It would also protect families from for-profit tax preparers’ often exorbitant fees to claim the EITC and CFTC.

Increase the Massachusetts Earned Income Tax Credit (EITC) from 40% to 50% of the value of federal EITC

Raising the MA EITC match rate would increase financial resources for working families with low incomes, improving economic stability and children’s health. Research shows that a $1,000 credit reduces incidence of low birth weight and increases birth weight. A 50% match would deliver an average benefit of $1,050 to Massachusetts families.

Index the Child and Family Tax Credit to inflation, thereby protecting its value over time

The Child and Family Tax Credit will provide $310 per dependent in tax year 2023 and increase to $440 per dependent in tax year 2024. However, the credit is not slated to increase again thereafter. Indexation is essential to prevent erosion of the Child and Family Tax Credit over time. Increases in inflation over the last several years underscore the need to index tax credits and other benefits to inflation. Since 2018, the federal Child Tax Credit has lost 15 percent of its real value to inflation. This is particularly important to protect families with low incomes, who spend an outsize proportion of their budget on necessities like groceries and utilities.

Increase the Child and Family Tax Credit to at least $600 per dependent
A benefit that ultimately reaches $600 per dependent will reposition Massachusetts in the top two-thirds of state dependent tax credits – falling behind California, Colorado, Minnesota, New Jersey, Oregon, and Vermont, all of which have passed credits of at least $1,000 per dependent within the past year. A statewide poll found that 77% of Massachusetts residents supported a $600 credit. This widely supported increase would go further in helping families afford necessities and the cost of raising children and caring for other dependents.

Expand Child and Family Tax Credit eligibility to all children under the age of 18
While the Child and Family Tax Credit is essential for families with children under 13, disabled dependents, and seniors, it excludes families with teenagers from support. Extending credit eligibility to include children of all ages would strengthen this credit and its intent: to provide financial relief to families with dependents in the Commonwealth. Extending age eligibility would recognize that costs of raising children do not stop when they become teenagers. In fact, family expenses can often increase as a child ages. For example, teenagers require more food to fuel their quickly growing bodies.