In 2018 and 2019, CPL worked closely with the Franchise Tax Board (FTB) and one of the state’s EITC outreach and awareness implementing partners, CalEITC4Me, to encourage take up of the federal and state EITC. The EITC is administered through the tax code– to claim the credit, you have to file your taxes. However, many who qualify for the credit are not required to file taxes due to their income level. Reaching out to these individuals is a particular challenge for the FTB.

While there are a number of outreach efforts funded by the state, both FTB and CalEITC4Me wanted to know if they are:

• Reaching the right people?
• Employing the right messengers?
• Targeting the right barriers to take up?
• Using the right mode and formality?

Research: In a series of randomized trials, more than one million Californians received text messages and letters designed to inform them about the credits. Although some people engaged with online resources about the EITC shared in the texts and letters, these efforts had no effect on increasing the number of people who filed a tax return or claimed the EITCs, indicating that these additional, targeted outreach strategies were not enough to increase take-up of the EITCs amongst low-income households.

Based on these results, the research team made three policy recommendations.

First, nudges (like the ones used in the experiment) should not be employed as the sole strategy to get non-filers to claim the credits.

Second, government agencies should continue partnering with researchers to use administrative data to identify Californians who are not enrolling in or claiming programs for which they are eligible.

Third, government agencies and service providers should explore the feasibility of simplifying the filing and claiming process to encourage more non-filers to claim the EITCs. New strategies should also be rigorously evaluated to determine if they are effective at increasing claiming rates.

Click here to read the policy report, press release, and working paper and to see press coverage of this research, including Planet Money, which called it “one of the most fascinating experiments in “nudging” we’ve seen in a while.”