The federal Earned Income Tax Credit (EITC) has proven to be the most effective anti-poverty program for working low-income families in the United States. Established in 1975 to offset payroll taxes and to provide a modest supplement to low wages, the EITC is now a $40 billion program serving over 20 million Americans. Over the past decade, 22 states and the District of Columbia have reformed their tax codes to include a state EITC to offset state income tax liability, provide an additional financial boost to low-income working families, and lift families out of poverty while also offering an incentive to work. In this policy brief we discuss some of the issues and options of a state EITC for Kentucky.
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PolicyInsights-No2.pdf