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Democrats in the Illinois State Senate and House of Representatives are simultaneously proposing legislation that would expand the state’s earned income tax credit and also create a state child tax credit. Illinois. The funds, which would amount to a tax cut for many residents, would help reduce child poverty and alleviate some of the high prices recently due to inflation, supporters of the bills say.
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More than 100 organizations across Illinois have endorsed the legislation, according to a report by NBC affiliate WGEM.com.
The earned income tax credit, in particular, would expand eligibility to 1.2 million people beyond the 3.6 million Illinois residents who already receive the state credit. Representative Carol Ammons pointed out that the plan would expand eligibility to reach underserved communities, with the EITC reaching 44% of all black households and 65% of Latino households in the state. Overall, this would give 40% of all Illinois residents a permanent tax reduction.
As part of the legislation, a child tax credit would be introduced in year two, providing up to $600 to all eligible families with dependents under the age of 17. This would be offered as a fully refundable tax credit when the resident files his Illinois state taxes.
The Center for Tax and Budget Accountability noted that the plan could cost about $415 million, or less than 1% of the money the state takes from the General Revenue Fund each year, WGEM.com reports. CBTA’s Allison Flanagan said lawmakers could use $105 million in ARPA funds for EITC expansion in 2023. Funds for subsequent years could also come from ARPA dollars, she said. reported to WGEM.
Capping tax rebates for retailers and tax credits for private scholarships could create an additional $266 million dollars per year to fund new programs. She added that she believes the EITC and CTC funds could pump up to $1 billion back into the Illinois economy by putting money in the hands of low-income workers, who will get out and spend this money in their communities.
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But the legislation is not without obstacles and obstacles. First, the annual child tax credit of $600 is a drop in the ocean compared to the $250 or $300 per child per month that people received under the federal program. Additionally, while earned income tax credit relief may be quicker, the CTC is not expected to come into effect until 2023.
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