OUR POSITION ON FAMILY TAX CREDITS:
United Way of Greater Lorain County supports sustaining and expanding poverty-alleviating tax credits, at the federal and state level, that provide a boost to lower and moderate-income households.
INTRODUCTION:
The Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) are two vital federal programs that help offset the high cost of raising children and support low- to moderate-income workers. These credits enjoy strong bipartisan support and generate benefits beyond recipients, including improved child outcomes, increased labor force participation, and higher tax revenues.
THE EARNED INCOME TAX CREDIT (EITC):
Introduced in 1975, the EITC has been expanded multiple times, most recently in 2021 through the American Rescue Plan (ARP). It supplements wages and incentivizes work, raising after-tax income for millions. For tax year 2024 (returns filed in 2025), about 24 million workers and families received $70 billion in EITC benefits, with an average credit of $2,894.
The EITC lifts over 6 million people out of poverty each year—more than any other program for working-age households. It also reduces government spending on other safety net programs and generates significant social value: every $1 of net EITC spending yields over $3 in benefits.
THE CHILD TAX CREDIT (CTC):
Established in 1997, the CTC helps families afford essentials like food, housing, childcare, and school supplies. The credit is currently up to $2,200 per child, with a $1,700 refundable portion beginning with 2025 tax returns filed in 2026, called the Additional Child Tax Credit. You must have earned income of at least $2,500 to be eligible for the ACTC.
In 2021, the ARP temporarily expanded the CTC, raising the credit to $3,000–$3,600 per child, making it fully refundable, and distributing it through monthly payments. These changes nearly halved child poverty – dropping it to 5.2% from 9.6% in 2020. However, poverty rose sharply after the ARP provisions expired, reaching 13.4% in 2024.
Despite the rollback of ARP provisions, the CTC and EITC together lifted 6.8 million people – including 2 million children – out of poverty in 2024. These programs remain cornerstone tools in the fight against poverty and economic insecurity.
LOCAL IMPACT
United Way of Greater Lorain County leads the Lorain County Free Tax Prep impact initiative, with local volunteers preparing and filing over 2,100 federal and state tax returns, with about 17 percent of filers qualifying for the EITC. In total, over $2M in federal refunds were brought back to Lorain County.
RELATED TO UNITED WAY OF GREATER LORAIN COUNTY INITIATIVES:
- Lorain County Free Tax Prep
- United Community Assistance Network (UCAN)