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What is the Earned Income Tax Credit (EITC)?

An EITC helps families and individuals who work but struggle to get by on low wages, which boosts the economy and reduces poverty. Currently, one out of five West Virginia households receives the federal EITC, but unlike 29 other states, there is no state-level EITC to assist working families in West Virginia.

Who would a state EITC help, and how?

Over 153,000 working families in West Virginia could keep more of their earnings if we enact a state level EITC. The tax credit can only be claimed by people who pay taxes and work low-wage jobs. Over 188,000 West Virginia children would be helped.

The tax credit allows families who are struggling to make ends meet by providing a tax break that makes it easier to pay for necessities like groceries, school supplies, or car repairs. This extra help means kids do better and go further in school, families are healthier, and their economic situation is improved. As a result of getting a better start as children, kids whose families received the EITC are more likely to become productive adults and earn more as adults.

The amount of the tax-credit varies based on family income and size. For example, a single mother with two children who works a full time minimum wage job could keep over $800 more of her earnings because of a state EITC. A family of four making $36,000 per year could keep over $400 more.

Why is a state EITC so important?

A state EITC would make it easier for lower-paid workers to make ends meet and afford basic necessities like childcare and transportation. With families with very low wages, the credit increases with every dollar earned, which encourages them to work more hours. That additional experience in the workforce can lead to higher pay and better opportunities, helping to put their family on a better path.

A state EITC is not only good for families but also for local businesses and has the support of the business community. If West Virginia creates a state EITC, it would boost local economies across the state by helping lower wage workers keep more of their income—income they then spend to buy groceries, pay for car repairs, or put their children in daycare.

Why now?

Enacting a state EITC is good for both lower-wage working families and small businesses—two vital pieces of the West Virginia economy that must be rebuilt following the Great Recession.

Particularly for working families with children, a state EITC will help parents build a better life for their children by lifting them out of poverty and helping afford the basics like groceries or car repairs.

For small businesses in West Virginia, the EITC is a way to keep working families as customers by boosting their after-tax income which allows them to buy necessities at local stores and businesses. A state EITC would translate to over $48 million of economic activity in support of West Virginia’s local economies.


Please contact:
Seth DiStefano
Policy Outreach Director
West Virginia Center on Budget and Policy