Some of our nation’s most important anti-poverty programs are increasingly distributed through federal and state tax systems. This is true of the recent pandemic-related stimulus checks, but is also true of ongoing programs like the Earned Income Tax Credit (EITC) and the California Earned Income Tax Credit (CalEITC). These credits can provide a substantial financial boost to low-income Californians, but many of these households are at high risk of not receiving these tax credits because they are not required to file taxes. Understanding who does not receive these credits despite being eligible can shed light on how to ensure that all eligible Californians receive them. In this brief, we share the first-ever estimate of the CalEITC Take-up Gap, including the number of Californians enrolled in CalFresh who did not receive the CalEITC in 2017 and the dollar amount unclaimed.
Key Research Findings (scroll down for interactive map)
1. Almost half of eligible Californians on CalFresh did not claim the CalEITC.
2. The Take-up Gap includes non-filers and families that file their taxes. Among the 150,000 families that file their taxes, those that use paid in-person tax preparation services are at highest risk of not receiving the credit.
3. Among eligible people who filed taxes and claimed the federal EITC, but who did not claim the CalEITC, 92% had used an in-person, paid tax preparer.
4. Very low-income earners were the most likely to miss the credit and make up the largest share of the take-up gap.
5. Californians identified as Hispanic are almost half of the take-up gap. Adults identified as Black, American Indian, or Alaskan Native are most likely to miss out on the CalEITC because they did not file their taxes.