EARNED INCOME TAX CREDIT 2009 EXPANSION: A NATIONAL AND STATE-LEVEL ANALYSIS OF CHILD POVERTY REDUCTION, TAX RETURNS, AND INFLATION-ADJUSTED BENEFITS, 2000-2022

Abstract

This study investigates the impact of the Earned Income Tax Credit (EITC) 2009 on child poverty in the U.S. Census Bureau data shows child poverty has increased by 0.29 points each year, starting at 16.20 percent in 2000 to 19.00 percent in 2008. States with the highest child poverty rates, such as Mississippi (28.08 percent), Louisiana (26.67 percent), New Mexico (25.23 percent), Arkansas (23.86 percent), and West Virginia (23.78 percent), exceed the national average of 17.62 percent for those years. Prior research found that childhood poverty negatively affects the economy, health, and education. Previous research on the impact of the 2009 EITC policy change on child poverty reduction in the U.S.—including metrics such as EITC claims, average credit per household, and inflation-adjusted benefits—has been limited or inconclusive. This study investigates the effects of the EITC provisions introduced through the American Recovery and Reinvestment Act of 2009 on the U.S. child poverty. It also focuses on state-level EITC tax returns and average credit amounts in the five states with the highest and lowest child poverty rates, using a quantitative approach that combines interrupted time series and cross-sectional research designs with data from the U.S. Census Bureau and the IRS. Since 2000, the EITC has helped lift an average of 2.36 million children out of poverty each year. A 2009 policy change boosted that number by 21 percent, with 2.52 million children lifted annually. However, the impact declined during COVID-19, with noticeable drops in EITC claims, credits, and adjusted benefits. The 2009 expansion led to increased EITC use across both high- and low-poverty states, with the greatest gains seen in the most disadvantaged states— contradicting key assumptions of social construction theory. At the end, the study offers policy recommendations to enhance EITC’s equity and effectiveness.