D.C. Sets the Standard with Increase in its Earned Income Tax Credit

The District of Columbia this week increased its already highest in the nation Earned Income Tax Credit (EITC) from 35% to 40% of the federal EITC. This change will provide much needed relief to low-income families in the District who are feeling the pinch of rising prices during the current economic slowdown. It also sends a message to policymakers everywhere about the effectiveness of the EITC as a method for offsetting regressive sales and property taxes for those with the most need. Twenty-three states and the District of Columbia currently have an EITC. Nine of those states, however, have EITCs of less than ten percent of the federal. In addition, three states fail to make their credits refundable -- meaning those lowest-income families with little income tax liability are unable to see any benefit. While all these states should be praised for at least having an EITC, this recent change to the EITC in D.C. provides a great example towards which these states with less generous credits should strive.