Little Change in N.D. Tax Filers Receiving the Federal Earned Income Tax Credit

The federal Earned Income Tax Credit (EITC) is an antipoverty program for working individuals and families. The EITC reduces the amount of taxes owed and may provide a refund.

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

In 2006, 12.8 percent of all North Dakota tax filers claimed the EITC, a proportion relatively unchanged from 13 percent in 2005.

“The relative stability in North Dakota’s EITC recipients reflects the strong economy the state has been enjoying throughout the decade,” says Richard Rathge, State Data Center director. “Nonetheless, this program has been a very effective policy approach to assisting low-income working families and individuals supplement their earnings.”

Nationwide, 15.9 percent of tax filers claimed the EITC in 2006, down from 16.6 percent in 2005. The average credit that EITC filers received in 2006 was $1,979, compared with $1,932 in 2005.

Depending on income and family structure, tax filers may claim an EITC that could range in value from $1 to $4,400. In 2006, the average EITC credit that North Dakota EITC filers received was $1,705, which was up 2.6 percent from $1,661 in 2005.

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 2006, 59.4 percent of refunds received by North Dakota taxpayers claiming credits were EITC dollars. This proportion has declined steadily from 72.8 percent in 2000.

Of North Dakota tax filers claiming the EITC in 2006, 27.6 percent also claimed the Child Tax Credit. Those North Dakota families receiving the Child Tax Credit received, on average, $618.

NDSU Agriculture Communication