With policymakers considering overhauling the tax code this year, it’s worth noting that about one in four current or former armed forces families with children receive the Earned Income Tax Credit (EITC) and the low-income piece of the Child Tax Credit (CTC) — two key tax credits for low- and moderate-income working families.
Our new fact sheet gives state-by-state figures on how many active-duty and veteran families receive the credits.
Nationally, 1.5 million military families receive one of the credits, according to our analysis of Census Bureau and Internal Revenue Service data. In about 280,000 of these families, a parent now serves in the armed forces; in the rest, a parent is a veteran.
The 1.5 million families contain about 3 million children under age 18. They received, on average, about $2,650 per household from the EITC in 2011 and about $1,000 from the low-income portion of the Child Tax Credit.
Studies have found that children whose families receive more income support from the EITC tend to do better in school and are more likely to attend college and to earn more as adults.
For many active duty and veteran families, these credits make a major difference to their economic security:
- The EITC and CTC together keep more than 140,000 military families — with nearly 300,000 children and 600,000 total family members — from falling below the poverty line, based on the federal government’s Supplemental Poverty Measure (SPM). (The SPM, unlike the official poverty measure, counts tax credits as income.)
- These credits reduce the severity of poverty for about another 800,000 members of military families.
In 2013, a married couple with two children may qualify for the EITC if it makes less than $48,378; it may qualify for the low-income portion of the CTC if it makes less than about $47,000.