House Committee Scales Back Earned Income Tax Credit for Low-Income Workers

March 18, 2011 | , . | Posted in The Issues

The House Taxation Committee this week approved legislation scaling back the Earned Income Tax Credit.  The Earned Income Tax Credit is a refundable federal income tax credit for low to moderate income working individuals and families.  The state has its own credit which piggybacks onto the federal credit.

When the credit exceeds a person’s tax liability, it results in a tax refund.  This “refundability” piece is what is eliminated by the bill approved by the House Taxation Committee.  The bill was amended, however, to allow an eligible taxpayer to carry over for five years the amount that exceeds the individual’s tax liability.

In its original form, the bill also dramatically reduced the percentage of the credit, but this provision was amended out of the bill in committee.