Working class tax credit still alive

After taking a long, winding path through the legislature, a bill making the Earned Income Tax Credit permanent and refundable has made it through both the House and the Senate, though disagreements over amendments mean that the bill will now go before a conference committee.

The policy, which state Rep. Nadine Nakamura called “an additional cushion for our working families,” is estimated by the Hawaiʻi Tax Fairness Coalition to boost the incomes of 5,452 families by $420 on average while generating $2,840,179 in economic activity for Kauaʻi. The state EITC was introduced in 2018, but is set to expire at the end of this year.

“[The EITC] is one of the most successful anti-poverty programs in existence,” said Will Caron, communications director at the Hawaiʻi Appleseed Center for Law & Economic Justice.

“During tax season, working families can really use the boost that the EITC is capable of delivering. We want to make sure that the state EITC is continued so that those families can rely on that boost year after year, and they can help power our consumer economy at the same time.”

Unlike the federal EITC and most states that use the credit, the Hawaiʻi state EITC is not yet refundable, meaning that when a family’s credit exceeds the amount they owe income tax on, they do not receive the additional money.

The refundable federal EITC was among the most significant rebates that working families received during tax season this year.