State Income Taxes and Credits
Most states levy state income taxes, but the tax burden on low-income families varies significantly depending on where they live. A growing number of states offset this burden with state earned income tax credits and/or state child and dependent care tax credits. These credits are typically based on provisions in the federal income tax code, but states make all decisions regarding eligibility and benefit levels.
Federal decisions are italicized.
Income Tax Liability
Tax threshold
| Income tax threshold for single-parent family of 31 | $11,100/year (2006) |
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| Income tax threshold for two-parent family of 41 | $14,400/year (2006) |
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Tax burden
| Income tax burden for single-parent family of 3 at 100% FPL1 | $194/year (2006) |
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| Income tax burden for two-parent family of 4 at 100% FPL1 | $242/year (2006) |
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State Earned Income Tax Credit (EITC)
Income eligibility criteria
| Income eligibility rules same as federal EITC2 | Yes (2008) |
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| Income limit for 1-parent family with 2 or more qualifying children2 | $38,646/year (2008)3 |
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Benefit level
| Refundable credit available2 | Yes (2008) |
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| Percent of federal EITC2 | 10% (2008) |
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| Max benefit for family with 2 or more qualifying children2 | $482/year (2008) |
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State Child and Dependent Care Tax Credit
Income eligibility criteria
| Income eligibility rules same as for federal credit4 | No state credit (2007) |
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| Income limit for family with 2 or more qualifying children4 | No state credit (2007) |
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Eligible expenses
| Child care expenses eligible by same rules as federal credit5 | No state credit (2007) |
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Benefit level
| Refundable credit available4 | No state credit (2007) |
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| Benefit structure4 | No state credit (2007) |
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| Max benefit for family with 2 or more qualifying children4 | No state credit (2007) |
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Data Notes and Sources
Data on State Income Taxes and Credits were compiled by NCCP in May 2007. Some state policy decisions may have changed since these data were collected.
- Calculations include income tax credits that are available to all low-income families in the state, such as state earned income tax credits.
Jason A. Levitis, The Impact of State Income Taxes on Low-Income Families in 2006, Center on Budget and Policy Priorities, 2007.
- State EITC Online Resource Center, http://www.stateeitc.com (accessed June 2, 2008); with additional information from NCCP.
- The limit for a two-parent family with one qualifying child is $36,995 per year ($41,646 per year for two or more qualifying children).
- Nancy Duff Campbell, Joan Entmacher, Amy K. Matsui, Cristina Martin Firvida, and Christie Love, Making Care Less Taxing: Improving State Child and Dependent Care Tax Provisions, National Women's Law Center, 2006; with updates from National Women's Law Center, 2008 Supplement to Making Care Less Taxing, 2006.
- These include care expenses for children under 13 years that allowed the claimant to work or look for work, up to a maximum of $3,000 per year for one child and $6,000 per year for two or more children. Claimed expenses may not exceed claimant's earnings, or, in two-parent families, the earnings of the lesser-earning parent; full-time students are treated as having $250 per month in earned income (or $500 per month in families with two or more children).
Nancy Duff Campbell, Joan Entmacher, Amy K. Matsui, Cristina Martin Firvida, and Christie Love, Making Care Less Taxing: Improving State Child and Dependent Care Tax Provisions, National Women's Law Center, 2006; with updates from National Women's Law Center, 2008 Supplement to Making Care Less Taxing, 2006.
