North Carolina's Earned Income Tax Credit (EITC) is a modest but critical support for working families earning low wages. It ended December 2013 because policymakers failed to extend it as part of the tax plan that further shifts the tax load to low-income and middle-income families in the state.

The credit was a small investment available only to people who work. It continues to be considered a powerful anti-poverty tools, especially for children. The EITC also serves to offset the disproportionate share of income low-wage workers pay in total state and local taxes—not just income taxes—compared to the rich. It benefited nearly 907,000 low-paid workers in every county in 2011.

While families can still claim the tax credit this tax season, next tax season it will be gone unless policymakers reinstate the EITC. Now is precisely the wrong time to take away this support for working families in North Carolina.

EITC in North Carolina:
A Tool to Help Working Families and Communities Statewide

Nearly 907,000 North Carolinians claimed the credit in 2011, with claimants living in each of the state's 100 counties, according to the NC Budget and Tax Center’s analysis of tax return data provided by the NC Department of Revenue.

Of particular note is that the state EITC effectively targets communities with high poverty rates and high unemployment rates. The communities that have traditionally experienced economic hardship in the eastern part of the state have some of the highest percent of state EITC returns filed as well the percent of households receiving the state EITC who receive a refund. These finding suggest that the state EITC is a precise, well-targeted program that helps North Carolina’s families and local economies throughout the state.

Now is the wrong time to further shift the tax load onto North Carolina's lowest-paid workers—especially those with children to support. Even with this tax credit—which helps low-paid workers makes ends meet by offsetting their total state and local tax contributions—moderate- and low-income working families still pay a greater share of their income in state and local taxes compared to the upper-middle class and wealthy. There is still time for policymakers to reinstate the North Carolina Earned Income Tax Credit.

NC Budget and Tax Center

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