President Obama on Tuesday will propose expanding the earned income tax credit to millions of low-income workers without children, a move the White House hopes can benefit more than 13 million workers who live at or just above the federal poverty line.
In a proposal released Monday, the White House said it wanted to nearly double the benefits childless workers who take the earned income tax credit can receive, to about $1,000 a year. The credit would extend, at least partially, to those who make up to $18,000 a year, roughly one and a half times the federal poverty limit.
The proposal would give 7.7 million workers a larger earned income tax credit, while 5.8 million workers currently ineligible for the credit would be able to get at least some money back. The White House also wants to expand the age range of those eligible to receive the credit. Currently, the EITC is only available to workers between 25 and 65 years old; the White House plan would expand that age range to include workers as young as 21 and as old as 67.
Workers who would benefit from EITC expansion, by state
Workers who receive the EITC now get 7.65 cents back on every dollar they earn up to $6,570, a maximum refund of $503. Obama’s proposed budget would raise that amount to 15.3 cents for every dollar, for a maximum refund of $1,005. The tax credit currently phases out for workers who make anything over $14,790; under the White House plan, workers who make up to $18,070 would receive at least some cash back.
About 32 million families receive either the EITC or the Child Tax Credit, which the Obama budget also wants to expand. And policymakers on both sides say it’s one of the more effective tax credits in use today, given that it provides incentives for low-income workers to enter or remain in the workforce.
More than half a million people who work as janitors, cooks, waiters and cashiers would qualify for the expanded EITC, according to Census data analyzed by the Council of Economic Advisors. Three million workers under age 25 would qualify.
The administration’s estimates show workers in all 50 states and the District of Columbia would benefit, ranging from more than a million workers in California, Texas and Florida to just 25,000 workers in Wyoming and Washington, D.C.