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SB 295: Income Tax - Earned Income Tax Credit - Refundability

The Maryland Catholic Conference (“Conference”) represents the public-policy interests of the three Roman Catholic (arch)dioceses serving Maryland: the Archdiocese of Baltimore, the Archdiocese of Washington, and the Diocese of Wilmington.

SB 295 increases, to 28% for tax year 2016 and 30% for tax years 2017 and beyond, the percentage of the federal earned income credit used to determine the amount that an individual may claim as a refundable credit under the Maryland earned income credit.

It is a far too common occurrence for people to diligently work hard, but still be in poverty. The income that many people earn in low-wage jobs is simply not enough to cover the cost of living in Maryland. The Earned Income Tax Credit (EITC) is a successful anti-poverty tool that provides a meaningful boost to low-income workers and their families, and local economies. 

A federal EITC was enacted in the mid-1970s to provide a tax credit to low-income working families to offset taxes and to reward work. The Conference was a lead advocate for having a state EITC when Maryland enacted it in 1987, setting it at 50 percent of the federal credit. The state credit was nonrefundable when it was established – it was used to offset tax liability, but did not provide a refund to low-income taxpayers. In the late 1990s, the Maryland General Assembly made a portion of the state EITC refundable. Currently, eligible Marylanders can claim a refund of up to 25.5% of the federal EITC. An expansion of the EITC refundability to 28% for the 2016 tax year and 30% for the 2017 tax year would be a meaningful boost to low-income workers and their families, enabling them to make a costly purchase, a substantial contribution to their family savings, or to provide for their families in some other fashion.

The Conference appreciates your consideration and urges you to support SB 295.