Imagine this: you fill out your state income tax form. At the end, you see you see your total income tax comes to $600 but you have an earned income tax credit of $1100. So, what happens next?
Well, if you live in many other states, your state government will cut you a check for the difference between what you owe and the credit you earned. Woohoo! $500! That’ll be useful for car repairs, kids’ dance classes, your insurance premium, etc.
But wait. You live in Virginia. And in Virginia, the Earned Income Tax Credit (EITC) is not fully refundable. No $500 for you.
The EITC is a federal tax policy also utilized by 29 states and the District of Columbia. It is literally a tax credit for working: a targeted tax credit that low-wage Virginians can claim at tax time to reduce what they owe in state income tax. It can only be claimed by people who earn income through work, and the credit is structured to encourage people to work more hours.
This year, Virginia has the opportunity to make the EITC fully refundable–meaning you earned a credit larger than the amount of taxes you owe, the state government would cut you a check for the difference (that $500 in our example above!) Because the EITC is a tax credit specifically targeted to working, low-income families, it’s actually an incredibly powerful tool for lifting families and kids out of poverty. In 2017, the federal EITC helped almost 6 million Americans out of poverty, including almost 3 million kids. In Virginia, around 600,000 people benefit every year.
For low-income families, every dollar counts. It is EXPENSIVE to be poor. For families living paycheck to paycheck, small inconveniences like a car breaking down or needing to take an (unpaid) sick day can be the difference between surviving and catastrophe.
Every year, Virginia gives away millions of dollars to tax breaks to corporations. Those priorities are pretty questionable, to be honest. This year, we can put our money where our morals are and take action to make the EITC fully refundable in Virginia, putting more money in the pockets of working families who will turn around and spend it in our communities.
Making work pay, lifting families out of poverty, investing in our communities? Sounds like a win to me. Take action now and contact your legislators to ask them to support making the EITC fully refundable in Virginia.