North Dakota Tax Filers Receiving the Earned Income Tax Credit Rose in 2005

The Earned Income Tax Credit (EITC) is an antipoverty program for working individuals and families. The EITC reduces the amount of taxes owed and also may provide a refund. In 2005 (latest figures available), 13 percent of all North Dakota tax filers claimed the EITC, up slightly from 11.5 percent in 2000.

This month’s “Population Bulletin,” a monthly publication from the North Dakota State Data Center at North Dakota State University, focuses on EITC data released from The Brookings Institute’s Metropolitan Policy Program (http://www.brookings.edu/metro/EITC/EITC-Homepage.aspx).

“The increase in the proportion of workers and working families that take advantage of the EITC is good news because it is an efficient and effective program to assist low-income workers to rise above poverty,” said Richard Rathge, North Dakota State Data Center director.

Nationwide, 16.9 percent of tax filers claimed the EITC in 2005, up from 14.7 percent in 2000.

Depending on income and family structure, tax filers may claim an EITC, the value of which could range from $1 to $4,400. In 2005, the average credit that North Dakota EITC filers received was $1,661, up 11.3 percent from $1,493 in 2000. Nationwide, the average credit that EITC filers received was $1,894, up 14.2 percent from $1,658 in 2000.

For most taxpayers who claim the EITC and receive a tax refund, the EITC comprises the largest portion of those refunds. Taxpayers may claim other credits, such as the Child Tax Credit, Child and Dependent Care Tax Credit and Education Credits, that add to their refunds. However, in 2005, 60.4 percent of refunds received by North Dakota taxpayers claiming the EITC and other refunds were composed of EITC dollars. This proportion has declined steadily from 72.8 percent in 2000.

Of North Dakota tax filers claiming the EITC in 2005, 28.1 percent also claimed the Child Tax Credit. Those North Dakota families receiving the Child Tax Credit received, on average, $606.

NDSU Agriculture Communication