This Keeps People Working, Out of Poverty and Improves Kids' Education and Health. WHAT IS IT?

John Nevitt
Senior Manager, Family Stability

A group of leaders across Kentucky have been working for the past few years to develop legislation that would allow our state to join 25 other states that have already adopted a State Earned Income Tax Credit (EITC), modeled after the federal credit. 

So, what is a state EITC and why is it important?

The federal Earned Income Tax Credit helps low-to-moderate income working families offset their income taxes so they have more money to meet their basic needs and support positive outcomes for their children.  A state EITC provides an additional credit at a percentage of the federal level to make an even greater difference for families.  This is particularly helpful in light of the rising cost of healthcare, transportation, and utilities.

In the 2012 tax year, the federal EITC paid over $917 million to nearly 400,000 families in Kentucky, with the average credit about $2,300 per family.  If a state credit were in place at 15% of the federal credit, this would represent an additional $138 million going back to hard working families across our state, at an average of $345 per family.

So, how exactly does this credit help families?

An Extra 300 Bucks Can Make a Big Difference for Some This Tax Season

By John Nevitt

Can you believe we're only 50 days from that annual deadline to file state and federal taxes? This time of year, money seems to be on everyone's mind and every penny can count.

For many hard working families, $300 can be the difference between being in crisis and managing a minor emergency. All of us have been there at some point or another; the furnace goes on the fritz, the car needs new brakes, your son falls off his skateboard and requires stitches. Life happens!

For families living from paycheck to paycheck, having a cushion that's as small as $300 can make a big difference. That’s why for the last few years, Metro United Way has partnered with organizations across the state to enact a state Earned Income Credit (EIC). In short, the Kentucky EIC is a tax credit modeled after a similar federal credit that would help low-to-moderate income families make ends meet.