Rep. Watson Coleman Reintroduces Legislation to Expand Earned Income Tax Credit
The EITC Modernization Act would expand EITC eligibility to caregivers and students
Today, Congresswoman Bonnie Watson Coleman (NJ-12) reintroduced legislation that seeks to address growing economic divisions by making caregivers and students pursuing higher education or advanced degrees eligible to receive the Federal Earned Income Tax Credit (EITC). The EITC Modernization Act would increase financial stability for these two groups, while also making innovative updates to the EITC program.
“We know that the economy isn’t working for many people and it’s often difficult for families to make ends meet. We also know that the EITC works to close those gaps, so expanding eligibility to those seeking better paychecks through higher education or working the equivalent of a part-time job to care for a family member just makes sense,” said Watson Coleman. “These folks work long hours and multiple jobs to have enough income to cover day to day expenses. Instead of going out of our way to cut taxes for billionaires and corporations, federal policy should be to help people striving to reach up into the middle class.”
The EITC is a refundable tax credit for low- and moderate-income working individuals, primarily focused on couples with children. It reduces the amount of tax that that individual would owe with the possibility of receiving a refund after filing taxes. Watson Coleman’s bill would extend eligibility for this credit to caregivers and independent students pursuing higher or vocational education, providing a measure of financial stability to both groups that will help drive economic growth across the communities in which they reside.
A recent study by the National Alliance for Caregiving and AARP found nearly 40 million Americans are providing unpaid care. The economic value of unpaid work provided by family caregivers is estimated at $600 billion. This amounts to a $130 billion increase in unpaid contributions since 2019. Sixty-one percent of these individuals report making changes such as cutting back on their paid working hours, changing jobs, stopping work entirely, taking a leave of absence, or other related changes because of their caregiving role, contributing to higher rates of financial instability. Concurrently, students seeking higher-paid career paths often struggle with the real-time costs and future debt of the education they need to achieve their dreams. Roughly three million students eligible for Pell grants in the 2016-2017 school year, more than 30 percent of whom have dependents, would have received the EITC under this bill.
In addition to broadening eligibility, the EITC Modernization Act would:
- Set a minimum baseline EITC payment for students and caregivers of $100 a month ($1,200 a year)
- Create an option for recipients to receive their benefits monthly, to help cover day-to-day expenses as they arise
- Fund the Volunteer Income Tax Assistance (VITA) Program, which offers free tax help to people who generally make $54,000 or less, to ensure working Americans can get the help that they need
“This bill begins to recognize that the overlooked and often thankless work of caregiving is essential to our society. Until we have more robust paid leave policy valuing their contributions through the EITC is critical,” Watson Coleman added.
The EITC Modernization Act is cosponsored by Reps. Troy Carter (LA-02), Barbara Lee (CA-12), and Alma Adams (NC-12).
To see the text of the bill, click here.