REPORT: Prosperity for All: Expanding the Earned Income Tax Credit for Childless Workers

For Immediate Release

TRENTON, NJ (November 14, 2019) – The Earned Income Tax Credit (EITC) has been proven to lift low-paid workers and their families out of poverty, but far too many New Jerseyans are left behind, according to a new report by New Jersey Policy Perspective (NJPP). This is a direct result of strict eligibility requirements that exclude young adults entering the workforce.

“The Earned Income Tax Credit has been proven to be a powerful tool for both supporting low- and moderate-income workers and boosting state and local economies,” said Vineeta Kapahi, NJPP’s 2019 Kathleen Crotty Fellow and author of the report. “As it is currently designed, the EITC leaves far too many workers behind. Two of these groups of New Jerseyans are young people under 25 who are just starting their careers, and workers who are not raising children at home. Under current rules, workers under the age of 25 who do not have qualifying children receive no benefit from the EITC. It is critical that state lawmakers address this gap and continue to look for opportunities to both expand eligibility and provide more meaningful support to workers.”

The report release coincided with the announcement of two bills, both sponsored by Senator Joe Lagana (D-38) and Assemblywoman Verlina Reynolds-Jackon (D-15), to expand the state’s EITC. S-4213/A-5833 would expand the eligibility under the New Jersey EITC program to allow taxpayers 18 years or older to qualify, and S-4214/A-5837 would increase the benefit amounts under the New Jersey EITC program from 40 percent to 50 percent.

“Thanks to Senator Lagana and Assemblywoman Reynolds-Jackson, New Jersey will have the opportunity to strengthen and expand the EITC to better support young adults who are just entering the workforce,” said Brandon McKoy, President of NJPP. “These bills will provide a direct benefit to New Jersey workers who really need it.”

The report also recommends increasing the refundability of the New Jersey EITC for workers without qualifying children from 40 percent to 100 percent of the federal credit, and increasing the income threshold for workers without qualifying children from $15,570 to $25,000. These recommendations, combined with the bills sponsored by Senator Lagana and Assemblywoman Reynolds-Jackson, would benefit over 400,000 workers, infusing $156 million into local New Jersey economies.

Vineeta Kapahi is the fourth NJPP Kathy Crotty Fellow and is pursuing her masters in public policy at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University. The Crotty Fellowship was launched by NJPP in 2016 to continue Kathy’s commitment to public policy and her legacy of mentorship.

“I am grateful for the opportunity to have served as NJPP’s Kathy Crotty Fellow and hope that the research I conducted during the fellowship influences legislation that supports workers across the Garden State,” Vineeta added.

Read the full report here: https://www.njpp.org/economic-opportunity-2/prosperity-for-all-expanding-the-earned-income-tax-credit-for-childless-workers

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