Working Families Leverage Tax Credits to Make Ends Meet and Invest in Future

Paying for health care and paying off credit cards. Buying food, clothing or school supplies for children. Making car repairs. These are a few examples of how Georgians working with low wages invest the extra dollars they qualify for during tax season from the federal Earned Income Tax Credit (EITC).

Established in 1974, the EITC is a program with a history of bipartisan support that provides a bottom-up tax cut for working families. Eligible households receive a tax credit that averages about $3,000 based on income and family size. More than 1 million working Georgia families with low-to-moderate incomes claimed the EITC in 2015, bringing $2.9 billion into Georgia’s economy and communities across the state.

How are those resources used? The Center for Working Families Inc., a nonprofit that advances economic success for working families through workforce development, economic support and asset building, asked how tax filers visiting their annual volunteer income tax assistance site invested EITC dollars. Filers who qualified for the EITC  described how they planned to use the credit this year or had used the resource previously. More than 80 percent of respondents indicated the credit is important to help with necessities, like paying household bills and buying food. Almost half of responses noted the EITC is critical for making key investments for the future, such as buying a car and getting an apartment.

Browse the notes below to read firsthand how the EITC is leveraged by Georgia families to make ends meet and make bigger investments to help climb up the economic ladder.

Academic researchers came to similar conclusions. Studies show working families that receive the EITC apply the credit to two central goals: making ends meet now and investing in future economic mobility. These two goals help explain how the policy helps families in multiple ways, ranging from healthier babies to better performance at school and higher lifetime earnings. By effectively boosting the wages of families with low incomes, the EITC helps recipients cover core essentials like food and utilities, basic necessities that would otherwise be difficult to afford. For families with slightly higher wages and greater economic security, the EITC provides a significant sum of money that can be used toward bigger investments to help families reach the middle class.

The productive investment of EITC dollars by eligible families and accompanying societal benefits have helped the policy gain widespread support. Presidents and national lawmakers of all political stripes expanded and strengthened the EITC over the years. Twenty-nine states and the District of Columbia also build on the benefits of the federal EITC with complementary credits to lower families’ state taxes. Georgia does not offer a similar credit for working families, though state lawmakers introduced legislation to do so in recent years and seriously considered creating a Georgia Work Credit this year. As state leaders consider the best ways to invest new state revenue, they can enact a Georgia Work Credit next year to support working families and boost local economies throughout the state.

Here’s what one working Georgia mom told The Center on Working Families about how a Georgia Work Credit could help her family and the state.

I am a single mother with two young daughters that I have to take care of financially. It would help with food and clothing for them and also help with the state’s economy.

To learn more about the Georgia Work Credit or get involved, visit georgiaworkcredit.org.

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