The Earned Income Tax Credit (EITC) is a tax credit that subsidizes work for low-income families. The EITC is the nation’s largest cash or near cash assistance program after the Supplemental Nutritional Assistance Program (SNAP). In 2018, the EITC lifted about 5.6 million people out of poverty, including about 3 million children, according to the Center for Budget and Policy Priorities.
The amount of EITC depends on a family’s earnings and number of children; the maximum credit in 2019 was roughly $5,800 for a family with two children. The EITC is refundable, which means the full amount can be claimed even if it exceeds a taxpayer’s tax liability. Refundability is critical to the success of the EITC because it allows the credit to still reward work and support families even if workers pay little income tax.
Oklahoma is one of 26 states with a state EITC, set at 5 percent of the federal credit. In 2016, the Oklahoma Legislature made the credit non-refundable. The state EITC was claimed on 303.403 returns for $16.1 million in FY 2020, according to Oklahoma Tax Commission records.