North Carolina Democrats have proposed more legislation to restore the state’s earned income tax credit.
Senate Bill 576, dubbed the Recovery Rebate for Working Families Act, would set North Carolina’s earned income tax credit at 20% starting in the 2021 tax year. The bill’s sponsors said the nearly one million low-income North Carolinians who qualify could receive an extra $500 back under the proposal.
Canton resident MaryBeth Cochran said the extra money would help families similar to hers that are struggling to cover their basic needs during the COVID-19 pandemic.
Cochran worked at Kmart before the pandemic to supplement her disability check and take care of herself and her four grandchildren. The store closed last summer after Cochran was furloughed. Cochran said she now depends on food pantries and the state’s food assistance program for meals, has fallen behind on her bills and no longer can afford her medication.
“If this bill became law, my family would receive around $500 more each year at tax time,” Cochran said Wednesday during a news conference. “Those extra dollars would mean food on the table, heat during the winter, shoes for my growing kids [and] medications doctors say that I need. It’s money we can use to start to cover basics like utilities, transportation and housing.”
Earned income tax credits can be used cut the amount of taxes someone owes and could result in a tax refund increase. The amount of the credit varies based on how much a person makes and the number of dependents.
State earned income tax credits can be coupled with the federal credit for low-income taxpayers to reduce their state income tax liability, according to the Internal Revenue Service.
North Carolina implemented an earned income tax credit in 2007 at 3.5% of the federal credit and increased the rate to 5% in 2008. It was reduced to 4.5% in tax year 2013 before bing eliminated in 2014. Critics of earned-income credits believe they can increase tax filing errors.
The measure was co-sponsored by Sens. Kirk deViere, D-Cumberland; Michael Garrett, D-Guilford; and DeAndrea Salvador, D-Mecklenburg. A similar bill will be filed in the House this week, lawmakers said.
“The time has more than passed to bring back this tax credit, make sure the aid gets into the hands of the people who need it the most, so we can make sure that everyone in North Carolina has the opportunity to succeed,” Garrett said Wednesday.
North Carolina Democrats also have filed Senate Bill 181, which would set North Carolina’s earned income tax credit at 5% in the 2021 tax year until the 2025 tax year. Fiscal researchers estimate SB 181 could result in at least $120 million in tax credits.
View original post