STATE EARNED INCOME TAX CREDIT

State Earned Income Tax Credit


Sixteen states introduced or enacted legislation related to a state earned income tax (EITC) between February 2007 and July 2008. Four of those states enacted legislation to create a state EITC and eight others expanded an existing EITC.  Louisiana, New Mexico, North Carolina, and Washington all enacted legislation to create a new credit, bringing the number of states with a state EITC to 24.  Most noteworthy among these is Washington, which became the first state without an income tax to create an EITC. 

The table below provides details on legislation related to a state EITC that was introduced or enacted between February 1, 2007, and July 1, 2008.

State

2007-2008 Scorecard Policy Rating

Policy Action since February 2007

Description
Alabama
0%
no change
Alaska
N/A1
no change
Arizona
0%
no change
Arkansas
0%
no change
California
0%
no change
Colorado
0%
ex
 Colorado introduced legislation (HB 1362) to revive the state's dormant EITC. The bill died in committee.
Connecticut
0%
ex
 Connecticut introduced legislation (SB 163) in February 2008 that would have created a state EITC, set at 20% of the federal credit. The bill died in committee.
Delaware
50%
no change
District of Columbia
75%
Policy Action since Feb. 2007
 The District of Columbia increased its existing refundable EITC to 40% of the federal credit.
Florida
N/A1
no change
Georgia
0%
no change
Hawaii
0%
ex
 In January 2007, Hawaii introduced an asset-building omnibus bill (SB 1919) that included provisions to create a state EITC. The bill passed the Senate and passed the House with amendments, but died in conference. In January 2008, Hawaii introduced a bill (SB 2240) that would have created a refundable state EITC. The bill passed out of committee, but no further action was taken before the close of the legislative session.
Idaho
0%
no change
Illinois
50%
Policy Action since Feb. 2007
 Illinois enacted legislation (SB 338) in August 2007 to fix a quirk unique to the Illinois EITC, which for several years had prevented certain working families from receiving state EITC refunds.
Indiana
50%
Policy Action since Feb. 2007
 In March 2008, Indiana enacted a property tax reform bill (HB 1001) that included an increase in the existing refundable EITC from 6% to 9%.
Iowa
50%
no change
Kansas
75%
Policy Action since Feb. 2007
 In April 2007, Kansas enacted legislation (HB 2031) that increased its existing refundable EITC from 15 to 17 percent of the federal credit.
Kentucky
0%
ex
 In February 2008, Kentucky introduced two bills (HB 566 and HB 592) that would have created a state EITC. Both bills died in committee.
Louisiana
0%
Policy Action since Feb. 2007
 Louisiana enacted legislation (SB 341) to create a refundable state EITC in July 2007, set at 3.5% of the federal credit.
Maine
25%
no change
Maryland
50%
Policy Action since Feb. 2007
 In 2007, Maryland increased its existing refundable EITC from 20% to 25% of the federal credit and extended it to families without qualifying children.
Massachusetts
75%
no change
Michigan
0%
no change
 Refundable credit went into effect in 2008.
Minnesota
75%
no change
Mississippi
0%
no change
Missouri
0%
no change
Montana
0%
no change
Nebraska
25%
Policy Action since Feb. 2007
 Nebraska passed legislation (LB 367) that increased its existing refundable credit from 8 to 10 percent of the federal credit.
Nevada
N/A1
no change
New Hampshire
N/A1
no change
New Jersey
50%
Policy Action since Feb. 2007
 New Jersey raised the income threshold for its state EITC from $20,000 to federal eligibility levels. The state also made the credit available to workers without qualifying children and increased the credit from 20% to 25% over two years.
New Mexico
0%
Policy Action since Feb. 2007
 New Mexico enacted legislation (HB 436) to create a refundable state EITC in March 2007, set at 8% of the federal credit. The new law allows low-income families to claim both the state EITC and the state's existing Low Income Comprehensive Tax Rebate.
New York
75%
no change
North Carolina
0%
Policy Action since Feb. 2007
 North Carolina enacted a refundable state EITC in July 2007 as part of the state budget (HB 1473). The credit was set to 3.5% of the federal credit. In 2008, North Carolina increased its EITC to 5% of the federal credit.
North Dakota
0%
no change
Ohio
0%
no change
Oklahoma
50%
no change
Oregon
50%
no change
Pennsylvania
0%
pending
 Pennsylvania introduced a bill (HB 377) in February 2007 to create a state EITC. In passing through the House and Senate, the bill became laden down with multiple amendments that included costly tax breaks. The version that finally passed both chambers, and is currently awaiting the governor's signature, does not include a state EITC and bears little resemblance to the original bill.
Rhode Island
75%
no change
South Carolina
0%
no change
South Dakota
N/A1
no change
Tennessee
N/A1
no change
Texas
N/A1
no change
Utah
0%
no change
Vermont
75%
no change
Virginia
75%
no change
Washington
N/A1
Policy Action since Feb. 2007
 In March 2008, Washington enacted the Washington Working Families Credit (SB 6809), set at 5% of the federal EITC for the first two years and rising to 10% of the federal credit thereafter. With the passage of SB 6809, Washington became the first state without an income tax to enact a state EITC.
West Virginia
0%
no change
Wisconsin
50%
no change
Wyoming
N/A1
no change

1 States without an income tax were not assessed on this measure.

Source: Center on Budget and Policy Priorities and CFED.