Illinois Child Tax Credit in the Works – What Hurdles Does It Face?
Democrats in the Illinois state Senate and House of Representatives are simultaneously proposing legislation that would expand the state’s earned income tax credit and also create an Illinois Child Tax Credit. These funds, which would equate to a tax cut for many residents, would help alleviate child poverty and take some of the sting out of recent high prices due to inflation, proponents of the bills say.
More than 100 organizations across Illinois have endorsed the legislation, says a report by NBC affiliate WGEM.com.
The Earned Income Tax Credit, specifically, would expand eligibility to 1.2 million people beyond the 3.6 million Illinois residents who already receive the state credit. Rep. Carol Ammons pointed out that the plan would expand eligibility to reach under-served communities, with the EITC reaching 44% of all Black households and 65% of Latino households in the state. Overall, it would give 40% of all Illinois residents a permanent tax cut.
As part of the legislation, a Child Tax Credit would be introduced in the second year, delivering up to $600 to all eligible families with dependents under the age of 17. This would be delivered as a fully refundable tax credit when the resident files their Illinois state taxes.
The Center for Tax and Budget Accountability noted the plan could cost roughly $415 million, which is less than 1% of the money the state taps into from the General Revenue Fund annually, WGEM.com reports. The CBTA’s Allison Flanagan said that lawmakers could use $105 million in ARPA funds for the EITC expansion in 2023. Funds for the following years could also come from ARPA dollars, she told WGEM.
Capping tax discounts for retailers and tax credits for private school scholarships could create another $266 million in tax dollars annually to fund the new programs. She added that she believes the EITC and CTC funds could put as much as $1 billion back into Illinois’ economy by putting money in the hands of low-income workers, who will go out and spend that money within their communities.
But the legislation is not without hurdles and obstacles. First, the $600 annual Child Tax Credit is a drop in the bucket compared to the $250 or $300 per child per month that people received under the federal program. Additionally, although the Earned Income Tax Credit relief could come faster, the CTC isn’t expected to go into effect until 2023.
More From GOBankingRates
- 10 Places To Retire That Are Just Like Arizona but Way Cheaper
- If You Find a Rare 'Doubled Die' Penny, It Could Be Worth $1.14 Million
- 3 Ways to Recession Proof Your Retirement
- 5 Mistakes Even High Earners Make
