In Washington state, an estimated 37,000 veteran and armed forces families with children receive the Earned Income Tax Credit (EITC) or the low-income component of the Child Tax Credit.
According to a new report released today by the Center on Budget & Policy Priorities, nationally, roughly 1.5 million military families, which include about 3 million children under age 18, received one or both of the credits. The credits make a major difference to their economic security:
- The EITC and CTC together keep more than 140,000 military families — with nearly 300,000 children and 600,000 total family members —above the poverty line, based on the federal government’s Supplemental Poverty Measure, which counts income from tax credits.
- These credits reduce the severity of poverty for about another 800,000 members of military families.
- The credits also help working families with incomes modestly above the poverty line who still struggle with basic expenses like housing, school clothes, car repairs, and groceries.
The tax credits can also increase opportunity for children in military families. Recent academic research demonstrates that EITC receipt is linked to improved performance (including better test scores) by children in school — and to increased employment and earnings when the children reach adulthood.
Only people who are working can claim the credits, which were modestly expanded in recent years so they provide more help to more families. On average the credit amounts to $1,000 per household from the low-income portion of the Child Tax Credit in 2011 and $2,650 from the EITC.
The Washington state version of the EITC is the Working Families Tax Rebate (WFTR). It was enacted in 2008, but never funded.
The Center on Budget and Policy Priorities’ full report, Working-Family Tax Credits Help Over One Million Military Families can be found here.