Healthy Families Tax Credits Coalition

THE LATEST

More than 100 state and local organizations call on elected officials to pass a $600 Child and Family Tax Credit 

July 21, 2023, BOSTON – Today, 107 community-serving organizations and institutions called on the Massachusetts Legislature to prioritize children and families in final tax legislation by advancing a $600 Child and Family Tax Credit and boosting the Earned Income Tax Credit. This effort, led by the Healthy Families Tax Credits Coalition and Children’s HealthWatch, comes at an urgent moment as a conference committee comprising House and Senate members negotiate the differences between tax proposals from both chambers and the Healey-Driscoll Administration.

“Establishing a Child and Family Tax Credit that ultimately reaches $600 per dependent and is indexed to inflation offers a profound and historic opportunity to address affordability and recognize the cost of caregiving for Massachusetts families” the letter states. “By putting money back into families’ pockets, family tax credits are an effective anti-poverty tool that help families meet basic needs and protect against material hardship, which in turn protects health for family members across the lifespan.”

To illustrate the impact of a more generous credit, advocates point to evidence from the temporarily expanded federal Child Tax Credit, which dramatically reduced the number of children living below the poverty line and helped families with young children afford basic needs such as food and rent necessary for good health. The letter also highlights that a growing number of states – 17 in 2023 alone – have invested in state family tax credits as an approach to increase affordability, close racial income gaps, and maintain competitiveness. Eleven states currently offer a child or dependent tax credit.

The Massachusetts Child and Family Tax Credit will support over 1 million dependents in more than 700,000 families each year, and the Earned Income Tax Credit will reach more than 400,000 low wage workers across the Commonwealth.

Read the letter here and visit here for more information about the Healthy Families Tax Credits Coalition.

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ABOUT

The Coalition

The Healthy Families Tax Credits Coalition is a statewide nonpartisan network of advocates working to improve the health and well-being of Massachusetts children and families by expanding the state Earned Income Tax Credit (EITC) and passing a robust and inclusive Child and Family Tax Credit (CFTC). Our growing coalition is led by Children’s HealthWatch at Boston Medical Center and consists of community-based agencies, legal advocates, researchers, professional associations, social service providers, tax preparers, health providers, and Massachusetts workers and their families. A list of partnership and supporting organizations of the Healthy Families Tax Credits Coalition can be found at the bottom of this page under the “supporting organizations” section.

Formerly known as the Healthy Families EITC Coalition, since 2015 our network has successfully advocated to increase the state EITC, expand eligibility to survivors of domestic violence and abandoned spouses, and invest over $1.5 million annually to support the Volunteer Income Tax Assistance (VITA) program.

Policy Priorities

Increase the Massachusetts Earned Income Tax Credit (EITC) from 30% to 50% of the value of federal EITC.
Raising the MA EITC match rate would increase financial resources for working families with low incomes, improving economic stability and children’s health.

Extend eligibility for the EITC to immigrants who file taxes with an Individual Tax Identification Number (ITIN).
Despite paying taxes, immigrant workers who file taxes with an ITIN are excluded from claiming the EITC. These families have also been left out of federal relief throughout the pandemic, and have limited access to public benefits.

Establish a robust Child and Family Tax Credit (CFTC) that supports all children by combining the existing Household Dependent Tax Credit and Dependent Care Tax Credit into a single credit (a CFTC), increasing the value to at least $600/dependent, and removing dependent age limits.
Under current law, families must choose between two dependent credits: the Household Dependent Tax Credit (HDTC) and Dependent Care Tax Credit (DCTC). Families who claim the DCTC can receive up to 25% more than families receiving the HDTC if they have qualified child care expenses. This penalizes families who rely on other care arrangements, such as stay-at-home parents and extended family members, as well as families with low incomes who may be using subsidized care. Furthermore, the dependent credits are currently only available for children under age 12 and 13 (respectively), leaving out older children and other dependents. Streamlining the credits into a single CFTC, equalizing their value, and removing the dependent age limits would simplify this process for families and provide them with a more generous credit to meet their entire household’s needs.

Remove the large family penalty from both the EITC and new Child and Family Tax Credit.
Currently the EITC and dependent credits increase with family size, but only up to three children or two dependents, respectively. Holding all else equal, a family with two children will receive the same credit as a family with four children. This unfairly penalizes larger families and is entrenched in racist tropes that assume that families will have more children in order to gain a slightly higher tax credit.

Improve access to the EITC through sustained funding for the Volunteer Income Tax Assistance (VITA) program and a robust communications and outreach campaign.
In Massachusetts, 20% of families eligible for the EITC do not claim the credit. This rate is likely higher for state dependent credits, which – similar to the 2021 federal Child Tax Credit – recently became fully refundable and available to families without tax filing obligations. Sustained VITA funding and a widely disseminated outreach and communication campaign on refundable tax credits and the availability of VITA sites to assist families with low and moderate incomes would ensure that more households receive the credit. It would also protect families from for-profit tax preparers’ often exorbitant fees to claim the EITC and CFTC.

Earned Income Tax Credit (EITC)

The EITC is a benefit for working individuals and families with low to moderate income that reduces the amount of taxes they owe and may even provide them with a refund. It is a tax policy critical in reducing the financial burden of low-income families and has the potential to decrease food insecurity and increase health through shifting income towards spending on healthy meals and necessary medical care.

Child and Family Tax Credit (CFTC)

Under current law, the Household Dependent Tax Credit and Dependent Care Tax Credit are already available to the majority of families with eligible dependents, including those with no earned income and immigrants who file taxes with an ITIN. This existing structure is significant, as it supports families who are often left out of policies and for whom a fully refundable tax benefit may have the greatest, anti-poverty impact. Massachusetts has the opportunity to expand this impact and step up as a leader for families in children, especially as Congress has failed to reinstate the 2021 expanded Child Tax Credit – an expansion that reduced child poverty nationwide by 46%.

Volunteer Income Tax Assistance (VITA) Sites

The VITA program offers free tax help to people who generally make $60,000 or less, persons with disabilities, the elderly and limited English speaking taxpayers who need assistance in preparing their own tax returns. Often located at community-based organization, IRS-certified volunteers provide free basic income tax return preparation with electronic filing to qualified individuals. VITA sites also offer financial education and connect families with low incomes to other critical services, strengthening families and the local economy. VITA sites are a low-cost and high return activity offering an up to 60 to 1 return on investment. In a typical year, over 30,000 individuals are served by the 80 existing VITA sites across Massachusetts, and the services that sites provide results in $60 million in tax credits for taxpayers. Increasing awareness of these programs and increasing state funding will expand the capacity and reach of this essential and evidence-based program.

THE EVIDENCE

Earned Income Tax Credit (EITC)

• The EITC lifts children out of poverty by putting more money back into families’ pockets.
  • In 2018, the federal EITC kept 5.6 million people – over half of them children – out of poverty.
• The EITC lowers overall income inequality by 5-10% in a typical year, with a greater impact for Black households who are overrepresented in the bottom half of income distribution.
• Children who live in households that receive the EITC have better school performance, greater college enrollment, and increased work and earnings in adulthood.
  • Research shows that these academic achievement benefits are amplified with the size of the EITC received, with some suggestion that the benefit of larger EITCs are greater for children of color.
• Expansions in the EITC have been strongly associated with a decrease in infants born with low birth weights among pregnant women eligible for the credit. This relationship is significant because low birth weight is damaging to the long-term health and developmental potential of children and costly to the health system, yet few medical interventions are available that effectively reduce the risk of low birth weight.
• Children in families receiving the EITC have fewer behavioral health problems, such as anxiety and depression.
• EITC payments are associated with lower state-level rates of child maltreatment reports. For each additional $1,000 in per-child EITC and CTC refunds, state-level rates of reported maltreatment declined in the week of and 4 weeks following by an estimated 5%.
• Mothers receiving the EITC are more likely to have signs of good health, including lower risk of high blood pressure and inflammation and reduced reports of depression and stress.
• EITC helps families maintain extended caregiving arrangements.
• Supplemental EITC programs have been found to increase health-related quality of life and longevity among people with low incomes.

Child and Family Tax Credit (CFTC)

The American Rescue Plan Act of 2021 temporarily expanded the value of the federal Child Tax Credit (CTC) and – mirroring the structure of the existing MA dependent credits – made the credit fully refundable and available to families with no earned income. This change was transformational. Advance monthly payments helped families pay for food, rent, transportation, child care and other necessities as well as education and enrichment activities for their children. Child poverty was reduced by 46 percent. Research from Children’s HealthWatch found that the advance CTC helped families catch up on rent and improved health. Though not offered in advance periodic payments, this research may demonstrate the impact that a robust state Child and Family Tax Credit may have in Massachusetts.

Use the dashboard below to see how many dependents would be eligible for the proposed Child and Family Tax Credit by legislative district.

Select the “Your District,” tab and choose the district from the dropdown.  The table displays the district’s number of eligible dependent children under 13, the number of eligible adult dependents, and the percent of the district’s population that is eligible for the $600 credit.

The tabs, labeled “MA House” and “MA Senate,” display maps of the House and Senate districts. Hover (hold your cursor over) any legislative district on the map to display data for that district.