EITC Gains, RAL Drains: The widespread use of the Earned Income Tax Credit throughout Ohio

February 23, 2007

The federal Earned Income Tax Credit (EITC) or Earned Income Credit (EIC) is a refundable tax credit available to some working individuals and families who earn less than $38,000. This credit currently does more to bring working families out of poverty than any other government program. An estimated four million families were lifted above the poverty level because of the EITC program in 2004. The EITC, which varies in value according to family size, marital status and income, can reach a maximum of $4,536 in the 2006 tax year.

In the 2004 tax season, more than 780,000 Ohio families received the EITC at an average credit of $1,729, which brought more than $1.3 billion in federal refunds to Ohio.1 Only seven other states receive more EITC dollars than Ohio, and Ohio accounts for approximately 3.6% of all the
nation’s credits.

In this analysis, Policy Matters Ohio uses data from the IRS and the Brookings Institution to breakdown how the EITC helps working families in Ohio. This data is presented for each state legislative district in Ohio. As the charts indicate, the EITC brings millions of dollars into legislative districts across Ohio. However, roughly one-third of those receiving the EITC purchase a Refund Anticipation Loan (RAL). For EITC recipients who pay for tax preparation, more than 60 percent purchase RALs.

Full Report


Main EITC Page

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