Raises the earned-income tax credit from twenty percent (20%) to thirty percent (30%) for the tax years 2026 and beyond.
If enacted, the bill would directly affect the Rhode Island tax code, specifically altering the parameters under which the earned-income tax credit is applied. The increase to thirty percent is projected to meaningfully support countless families by increasing their disposable income. This change could potentially lift some families out of poverty, facilitating better economic stability and quality of life for those who heavily depend on the EITC as part of their annual income. Several economic studies suggest that raising the EITC can lead to improved outcomes in children's health and education, amongst other benefits.
House Bill H5760 aims to increase the earned-income tax credit (EITC) from twenty percent (20%) to thirty percent (30%) starting in the tax year 2026 and beyond. This enhancement is crucial for low to moderate-income working individuals and families, as it provides a significant financial boost to help alleviate their tax burden. The EITC is designed to incentivize work and reduce poverty by allowing eligible taxpayers to receive a larger refund when filing their state income tax returns, thereby indirectly supporting the broader economy through increased consumer spending.
While proponents laud the bill for its forward-looking approach to helping working families, opponents may argue about the fiscal implications of increasing credits that could impact state revenue. There may be concerns regarding the sustainability of the increased tax credits amidst budgetary constraints in the state. Furthermore, discussions may arise regarding the correct allocation of funds or tax breaks among different economic classes, especially in a changing economic landscape where the needs of various groups can significantly differ.