The "EITC Modernization Act" expands the Earned Income Tax Credit to include all taxpayers with dependents and qualifying students, establishes a minimum credit amount, and allows for monthly payments, while also creating a grant program to support volunteer tax assistance for low-income individuals.
Bonnie Watson Coleman
Representative
NJ-12
The EITC Modernization Act expands the Earned Income Tax Credit (EITC) to include all taxpayers with dependents and qualifying students, setting a minimum credit of \$1,200 for these groups. It allows taxpayers eligible for refunds exceeding \$240 to receive the EITC in monthly payments and lowers the minimum age for eligible individuals without dependents to 18. The act also establishes a grant program to support volunteer tax assistance programs for low-income taxpayers, prioritizing programs that reach underserved populations and educate people about income supports like the EITC.
EITC Gets a Major Upgrade: Monthly Payments and Broader Eligibility in New Bill
The "EITC Modernization Act" is basically giving the Earned Income Tax Credit (EITC) a serious overhaul. Instead of just helping out working folks with qualifying kids, this bill throws a lifeline to a wider group, including students and people taking care of other dependents. It sets a minimum credit of $1,200 for these groups, and – this is big – lets people get their EITC money monthly instead of waiting for one lump sum at tax time. (SEC. 3).
Cash Flow and Credits
This bill shakes things up by letting more people qualify for the EITC. It's not just about kids anymore; now, if you're caring for an elderly parent or another dependent, you might be eligible (SEC. 3). Plus, students who are eligible for Pell Grants or make less than 250% of the poverty line can also get in on the action (SEC. 3). The bill also lowers the age limit for those without dependents from 25 down to 18 (SEC. 3). Think of a young adult working their way through trade school, or an older individual caring for an aging parent. These changes will make it easier for them to make ends meet. If your refund is over $240, you can choose to get it in monthly chunks – a game-changer for budgeting (SEC. 3). For example, a single mom working retail could see an extra hundred bucks or more each month, which could be the difference between making rent or not, or affording those after-school activities.
Making Tax Time Less Taxing
Beyond the expanded EITC, this bill sets up a grant program to help low-income folks get their taxes done right (SEC. 4). It's called the Community Volunteer Income Tax Assistance Matching Grant Program, and it's designed to fund local programs that offer free tax prep to those who need it most (SEC. 4). The goal here is to make sure people are actually getting the credits they're entitled to, and not missing out because filing is too complicated or expensive. The bill prioritizes programs that reach out to underserved groups – people with disabilities, those who don't speak English fluently, Native Americans, folks in rural areas, military families, and the elderly (SEC. 4). Funds can be used to cover direct costs like staff wages, training, and outreach, but not general overhead (SEC. 4). This is to ensure that the money goes directly to helping people with their taxes. Programs have to maintain a 90% accuracy rate, or they risk losing funding (SEC. 4).
The Big Picture
This bill is part of a bigger push to address income inequality. The lawmakers behind it point out that the EITC has been around since 1975, and it's a proven way to boost family income, reduce poverty, and encourage people to work (SEC. 2). It's also good for local economies because that extra cash gets spent on everyday needs, giving businesses a little boost. The changes are set to kick in for tax years starting after the bill is enacted (SEC. 3, SEC. 4).