Our tax research explores the policy design and potential anti-poverty effects of existing and emerging tax policy. We explore how the tax code treats families and the impact of tax credits such as the Child Tax Credit, Earned Income Tax Credit, and the Child and Dependent Care Tax Credit. Our research also looks at the ways in which the tax system can support households with a range of other necessary expenses, including education, rent, energy assistance, and more. We explore the effect of current and proposed tax policy changes on individual and household poverty and well-being at the federal and state level, as well as in New York City.
Child Tax Credit
The Child Tax Credit (CTC) is one of the largest federal investments in children. Historically, eligibility targeted families with middle incomes, and eventually those with higher incomes, but left many low and moderate families excluded from the full credit. The 2021 temporary expansion made significant changes at the federal level to increase the credit amount, fully include children in families with low and moderate incomes historically left out, and introduce monthly delivery. Since 2021, there has been a rapid growth in the enactment and expansion of state-level Child Tax Credits and calls for a more permanent federal expansion. Our research tracks Child Tax Credit policy impacts and proposals at the federal, state, and local levels, including in New York City.
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a refundable tax credit designed to supplement the earnings of low-wage workers and is one of the largest federal anti-poverty programs. The EITC is delivered to households once a year at tax-time and eligibility and credit amounts have historically centered on workers with children. Many states also operate state-level EITCs, which vary in size and scope, but are often valued at a percentage of the federal credit. Temporary changes during the COVID-19 pandemic expanded access to and increased the federal EITC for low-income adult workers without children. Our work examines the impact of federal, state, and New York City EITC policy, as well as proposals for future change.
Child & Dependent Care Tax Credit
The Child and Dependent Care Tax Credit (CDCTC) is a federal tax credit that helps offset some of the cost of child care and other family care needs. It has long been a non-refundable credit, used only to offset a family’s tax liability, which means that families with low and moderate incomes have been historically excluded from the full benefit. Temporary changes during the COVID-19 pandemic increased the credit value and made the full credit amount available to families on the lowest incomes. Our work in this area examines the impact of current law and proposals for future change to child care assistance delivered through the tax system at the federal and state level, as well as in New York City.
Other Tax Credits
In addition to family tax credits such as the Child Tax Credit, Earned Income Tax Credit, or the Child and Dependent Care Tax Credit, tax credits can also support households with a range of other necessary expenses, from education, to rent, energy assistance, and more. The tax system has also been identified as a potential vehicle for creating an income floor – for example, through a negative income tax credit or dividend to provide a form of universal basic income – to support families. We examine policy and proposals across these areas at the federal and state level and in New York City.