Established by state policymakers in 2015, the California Earned Income Tax Credit (CalEITC) is a refundable credit that boosts the incomes of low-earning workers, helping them and their families to better make ends meet. A new California Budget & Policy Center report presents findings from the Budget Center’s fall 2016 survey of individuals who would likely be eligible for the CalEITC. This survey was intended to gauge awareness of the credit and inform strategies for increasing uptake of this critical support.
Results from the Budget Center’s survey show that the state should take steps to increase awareness of the CalEITC. The Budget Center survey — of visitors to county human services offices — points to a number of key findings, including:
- Limited awareness of the CalEITC: Less than 1 in 5 (18 percent) of those who were likely eligible for the CalEITC had heard of the credit, and just half of those who were likely eligible actually filed their taxes for 2015.
- Varied awareness by race and ethnicity: Only 10 percent of Latino respondents had heard of the CalEITC compared to 25 percent of white respondents.
- Frequent use of paid tax preparers, which erodes the value of the CalEITC: Among respondents who were likely eligible for the CalEITC and filed taxes for 2015, more than two-thirds — 7 in 10 — paid a tax preparer, even though they would have qualified for free tax assistance.
- Limited awareness of the federal Earned Income Tax Credit: Less than half — just 42 percent — of respondents who were likely eligible for the CalEITC had heard of the federal EITC, even though most of them likely qualified for it.
This Budget Center report offers a number of policy recommendations, based on the survey findings, for maximizing the success of the CalEITC. These recommendations include options for expanding and better targeting CalEITC outreach as well as boosting access to, and use of, free tax preparation services.
Read the report here.
This article was released by the California Budget & Policy Center.