Working family tax credits pump millions of dollars into the Arkansas economy. But millions more are left on the table every year when eligible Arkansans don’t claim their credits. Arkansas needs a coordinated, statewide effort to get more families to claim their federal Earned Income Tax Credit (EITC). An outreach campaign that increases participation by just 5 percent would lead to $19 million in potential economic benefit for these families.
The EITC is one of the nation’s strongest tools to promote work and help families escape poverty. Increasing participation means that hard-working families can keep more of what they earn. And it means a boost for local economies where that credit money is usually spent.
The rate of participation is increasing in Arkansas, but about one in five Arkansans who are eligible for tax credits still don’t receive them.[i] Many people fail to participate simply because they don’t know they qualify. Free tax assistance programs like VITA (Volunteer Income Tax Assistance) help low-income people correctly file their taxes so that they don’t miss out. But there is still a lot of room for improvement.
The EITC puts about $771 million into Arkansas’s economy annually. [ii] Imagine the economic boost we would see if we had 100 percent participation!
Some areas of the state have local outreach campaigns that are helping make sure eligible Arkansans get their full EITC. However, these efforts are scattered and do not cover all areas of Arkansas. We need to consider a coordinated statewide campaign to improve participation.