Earned Income Tax Credit - EITC

The EITC (Earned Income Tax Credit) is a refundable federal tax credit that can increase the effective wage of qualifying workers by up to $2/hour. As many as 40,000 households fail to file for the EITC because they are not aware of the credit, they don’t earn enough to be required to file taxes or because of education and language barriers. It is estimated 25% federal EITC money is left unclaimed by Utahns each year. An economic impact study commissioned by United Way of Salt Lake found that each increase of 10,000 households in utilization of the EITC could bring an additional $17 million in direct EITC payments to Utah and generate approximately $63 million in additional state and local economic activity.

The Federal Earned Income Tax Credit (EITC) was established by Congress in 1975 to offset the burden of Social Security and Medicare taxes on low-income taxpayers, to supplement wages for low-wage workers, and to make employment more attractive than welfare. The EITC was expanded in 1986 with President Reagan calling it “the best antipoverty, the best pro-family, the best job creation measure to come out of Congress.”