Similarly, the CTC supports the working class by providing up to $1,000 for each dependent child
under age 17 to help families offset some child-rearing costs. Unlike the EITC, the CTC is available
to middle-income and most upper-middle-income families as well, because it phases out at
considerably higher income levels than the EITC. While it’s partially refundable, it isn’t available —
or is available only in limited, partial form — to many working-poor families.
More than three-quarters of working-class families with children receive either the EITC and CTC
or both in a given year, with the combined tax credits averaging more than $3,000 among these
families. Together, the EITC and CTC lift roughly 4 million working-class adults, and over 4 million
children in their families, out of poverty.
13
Moreover, the EITC and CTC encourage work. Substantial research over the past two decades
shows that the EITC significantly increases beneficiaries’ work effort and is particularly effective at
encouraging work among single mothers who are paid low wages. In addition, research indicates
that the increased work effort and earnings extend into the next generation. Children whose families
receive more income from the EITC and CTC do better in school, on average, are likelier to attend
college, and will likely earn more as adults; they’re also likelier to avoid the early onset of disabilities
and other illnesses associated with child poverty, which further enhances their earnings ability as
adults. The EITC and CTC not only support the working class in the near term, but may also help
to push against harsh economic trends and boost work for future generations.
14
Nevertheless, the EITC and CTC both have glaring gaps that exclude many working-class
households from eligibility. Working “childless” adults, including non-custodial parents, are largely
excluded from the EITC even though, like workers with children, they also face labor-market
challenges. Those eligible “childless” adults who qualify receive an average EITC of about $300
(about one-tenth of the average for families with children), and childless workers who are younger
than 25 or have incomes above $15,010 ($20,600 for couples) aren’t eligible at all. Less than 10
percent of working-class households without children receive the EITC, versus nearly two-thirds of
working-class households with children. Largely as a result, working childless adults are the lone
group that the federal tax code actually taxes into, or deeper into, poverty.
15
The CTC, meanwhile, excludes many very low-income families from receiving all or part of the
credit.
16
To determine the CTC’s value, the would-be recipient excludes the first $3,000 of earnings,
and the credit phases in at a rate of 15 cents per dollar of earnings above the $3,000 threshold until it
reaches the full credit amount of $1,000 per child. As a result, working families with little earnings
13
CBPP analysis of March 2016 Current Population Survey data.
14
Chuck Marr et al., “EITC and Child Tax Credit Promote Work, Reduce Poverty, and Support Children’s
Development, Research Finds,” Center on Budget and Policy Priorities, updated October 1, 2015,
http://www.cbpp.org/research/federal-tax/eitc-and-child-tax-credit-promote-work-reduce-poverty-and-support-
childrens.
15
Chuck Marr et al., “Strengthening the EITC for Childless Workers Would Promote Work and Reduce Poverty,”
Center on Budget and Policy Priorities, April 11, 2016, http://www.cbpp.org/research/federal-tax/strengthening-the-
eitc-for-childless-workers-would-promote-work-and-reduce.
16
For more on how the CTC works, see “Policy Basics: The Child Tax Credit,” Center on Budget and Policy Priorities,
updated October 21, 2016, http://www.cbpp.org/research/federal-tax/policy-basics-the-child-tax-credit.