California and Maine Pass Major EITC Expansions

California and Maine Pass Major EITC Expansions

California and Maine recently took action to boost income for low-wage workers by passing legislation to significantly expand their state-level Earned Income Tax Credits (EITCs).

Maine’s EITC will increase from 5 to 25 percent of the federal credit for workers without dependent children and from 5 to 12 percent of the federal credit for all other eligible taxpayers. The legislation also expands eligibility to younger workers between the ages of 18 and 24. The expansion will be paid for using revenue generated from closing an “unintended loophole of the Maine Capital Investment Credit that provides disproportionately large benefits to businesses with out-of-state-income,” and is expected to boost income for roughly 100,000 households across the state, according to the Maine Center for Economic Policy.

Last week, California Governor Gavin Newsom (D) signed a budget that expands eligibility for the state’s EITC to taxpayers earning up to $30,000 and creates a credit for families with children younger than six, worth $1,000 annually. The EITC expansion will be paid for using revenue generated from California conforming to certain provisions of the federal Tax Cuts and Jobs Act and is expected to boost income for an additional one million low-wage workers, according to the California Budget & Policy Center.

These states join Minnesota, New Mexico, and Ohio in improving the EITC this legislative session, and Oregon may soon follow suit if Governor Kate Brown (D) signs a bill to prevent the state’s EITC from expiring and increase the size of the credit. To learn more about these recent expansions and other state-level tax credits across the country, visit our 50-state map here.