Working-Family Tax Credits Make a Big Difference for Military Families

The Center on Budget and Policy Priorities has examined how the EITC and CTC programs are utilized by veterans. With Congress considering overhauling the tax code this year, it’s worth noting that about one in four current or former armed forces families with children receive the Earned Income Tax Credit (EITC) and the low-income piece of the Child Tax Credit (CTC) — two key tax credits for low- and moderate-income working families. The Census and IRS numbers that our friends at CBPP examined show significant use of the tax credits by veterans.

Nationally, 1.5 million military families receive one of the credits, according to our analysis of Census Bureau and Internal Revenue Service data. In about 280,000 of these families, a parent now serves in the armed forces; in the rest, a parent is a veteran. Pennsylvania alone has 48,000 veterans and armed forces families with children that receive the EITC or low-income component of the Child Tax Credit annually.

The 1.5 million families contain about 3 million children under age 18. They received, on average, about $2,650 per household from the EITC in 2011 and about $1,000 from the low-income portion of the Child Tax Credit. Studies have found that children whose families receive more income support from the EITC tend to do better in school and are more likely to attend college and to earn more as adults.

New fact sheet gives state-by-state figures on how many active-duty and veteran families receive the credits.