Working families tax credits like the EITC have a proven track record of boosting economic opportunity and helping low- to moderate-wage working families make ends meet. Making it fully refundable will make sure all 600, 000 households receiving the EITC in Virginia get the full credit they’ve worked for.

Families must work to earn the EITC

• The EITC is available only to tax filers who have income earned from working
• The credits reduce a family’s tax bill
• The credit ramps up as a person earns more before leveling off and then phasing down.

• There is no cliff effect.

Makes taxes fairer

• Refundability begins to make up for Virginia’s regressive state and local taxes, such as sales and gas taxes, which take a larger share of the incomes of workers earning low wages than those of the highest-income households.

Boosts the economy

• Families with low-incomes spend more of their incomes locally, so a stronger state EITC would lead to more local spending and could pump millions of dollars into communities throughout Virginia.

Provides more opportunities for children

• Studies show working family tax credits have significant benefits – from improved infant health to increased college enrollment.
• Children whose families receive the EITC earn higher incomes in adulthood compared to similar children whose families did not receive the credit.

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EITC and the Federal Tax Law

Federal Tax Law is Unfair

• The recent federal tax cuts are tilted overwhelmingly to the wealthy, very high-income households, and large corporations.
• Unfortunately some states are already doubling down on the unfair federal approach and giving even more tax cuts to the same groups that got a huge share of the federal tax cuts.

Most Wealthy Individuals and Corporations Already Got Their Tax Break While Many Working Families Were Left Out

• While most taxpayers of all income groups will receive a net tax cut in their total federal and state tax bill, high-income people got the biggest break.
• Rather than give more tax cuts to the highest earners and corporations, state lawmakers should instead improve the state’s EITC to give targeted tax relief to the working Virginia families who largely did not benefit from the federal tax cuts.