Leave No Kansan Behind: A State EITC for All Workers

Karuva Kaseke | September 6, 2022

The state-level Earned Income Tax Credit (EITC) is one of the most powerful and valuable tools for reducing poverty. It is a commonsense tax break that helps working families make ends meet and raise a happy, healthy family. The EITC also supports local communities and boosts the state’s economy. The more Kansas workers have access to this credit, the more we all win.

Among other benefits, studies show the EITC: 

• Makes the tax code fairer for low-income families who disproportionately pay a higher share of their income in state taxes compared to the richest households. Families living on low incomes are also more likely to spend their refund dollars directly in the communities where they live — like for groceries, household supplies, health care, and other necessities — keeping money flowing in small communities and supporting local businesses. 
• Improves mental health in mothers and promotes better health outcomes in children. It has also been shown to have long-term positive effects on children’s educational attainment and potential future earnings. Eligible children receiving the EITC tend to score better in math and reading and are more likely to graduate and proceed to college than eligible children who do not receive the EITC. This translates into a greater likelihood of economic security as adults and ending cycles of generational poverty.
• Increases employment and reduces the number of individuals accessing public assistance. The EITC directly helps families take steps toward economic self-sufficiency. For most families, the EITC is a temporary tax break that enables them to stay current on bills, afford reliable child care and transportation so they can get to work, or buy groceries and school supplies.

Maximizing the Benefit of the EITC

In early 2021, the American Rescue Plan Act (ARPA) temporarily expanded EITC eligibility and increased the maximum credit available, providing crucial dollars to households facing financial stress. Eligibility was expanded to include the following populations:

• More childless individuals (triple the typical number);
• Workers aged 19 to 24 –years old (the lower age limit was previously 25);
• Workers over the age of 65; and
• Former foster youth and youth experiencing homelessness aged 18 to 24.

In Kansas, an average of 200,000 tax returns claim and receive EITC benefits every year. In 2019, more than 250,000 children lived in qualifying households. The ARPA eligibility expansion is estimated to have lifted 57,000 children above or closer to the poverty line and benefited 168,000 workers without children. The outcomes of this temporary eligibility expansion provide a tested model for some of the provisions that could be adopted and made permanent in order to make the state EITC as effective as possible.

Kansas lawmakers can capitalize on the monumental impact the EITC has proven to have on the well-being of Kansas workers and families. They could do their part to ensure equitable opportunity for financial security by:

• Supporting permanent adoption of the eligibility expansions that were included in ARPA. The credit provides low-income Kansas workers of all ages and family structures — including many without children — a strong foundation on which to build their lives and work their way toward economic stability in the long term.
• Championing an increase to the Kansas EITC. This additional boost would improve tax fairness and multiply the stated benefits of the credit. Eighteen states currently have higher EITC rates than the 17 percent of the federal amount offered in Kansas.
• Extending the EITC to all eligible Kansans working and paying taxes regardless of immigration status. Current EITC eligibility requires a Social Security Number for both the filer and any members within their household. This excludes many low-income workers who file taxes using an Individual Taxpayer Identification Number (ITIN) or have an ITIN holder in their household. This could include student visa holders, family members of workers with employment visas, domestic abuse survivors, and undocumented workers.

Every Kansan should be able to put food on the table, pay their bills, and take care of their family. Ensuring low-income working Kansans receive the full EITC credit, regardless of how much they owe in taxes, is a small investment that can make a very large difference in the lives of working families and is essential in giving all Kansas children a strong foundation in life.

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