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Working Family Tax Credits Help Wisconsin’s Military Families

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Middle Class to Working Poor

Middle Class to Working Poor

About 22,000 military families in Wisconsin receive the federal Earned Income Tax Credit (EITC) or the low-income component of the Child Tax Credit (CTC), according to a new report from the Washington, DC-based Center on Budget and Policy Priorities.

Nationally, roughly 1.5 million military families, which include about 3 million children under age 18, received one or both of the credits. The credits make a major difference to their economic security:

  • The EITC and CTC together keep more than 140,000 military families — with nearly 300,000 children and 600,000 total family members — from falling below the poverty line, based on the federal government’s Supplemental Poverty Measure, which counts income from tax credits.
  • These credits reduce the severity of poverty for about another 800,000 members of military families.
  • The credits also help working families with incomes modestly above the poverty line who still struggle with basic expenses like housing, school clothes, car repairs, and groceries.
  • The tax credits can also increase opportunity for children in military families. Recent academic research demonstrates that EITC receipt is linked to improved performance (including better test scores) by children in school — and to increased employment and earnings when the children reach adulthood.

Only people who are working can claim the credits, which were modestly expanded in recent years so they provide more help to more families. On average the credit amounts to $1,000 per household from the low-income portion of the Child Tax Credit in 2011 and $2,650 from the EITC.

Wisconsin also has a state version of the EITC, which only benefits working families with children. The Legislature made a substantial cut to the state EITC in the 2011-13 budget, resulting in higher taxes for working families with children.

You can read the full report on military families and working family tax credits here.

Photo from Eric Gravengaard licensed under Creative Commons

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WI Budget Project

WI Budget Project