Increase to Earned Income Credit and Personal Exemption to Help Working Families and Stimulate Local Economies
CHICAGO–(ENEWSPF)–February 4, 2012. As tax preparation season gets underway, Governor Pat Quinn today visited a tax assistance center organized by the Center for Economic Progress at Truman College to encourage working families across Illinois to learn about tax relief passed by the Governor earlier this year and how to apply for the Illinois Earned Income Tax Credit. The law doubles the state’s Earned Income Tax Credit (EITC) over two years, saving low-income workers an extra $105 million per year. The new law also benefits all Illinois taxpayers by raising the value of the personal exemption and indexing it to inflation.
“Illinois took a huge step forward in helping working families keep more of what they earn,” Governor Quinn said. “But we need to do all we can to make sure the word gets out about who is eligible and how to apply for tax relief that will help every day people and support our economy.”
To benefit from Illinois’ EITC, also known as the Earned Income Credit (EIC), taxpayers must include it on their tax returns. The not-for-profit Center for Economic Progress (CEP) estimates that between 10 and 20 percent of eligible taxpayers did not file for EITC last year.
To help working families achieve the maximum savings on their taxes, the Illinois Department of Human Services (DHS) partners with the CEP Tax Counseling Project to provide free tax preparation assistance at tax assistance centers across the state. The services are provided free of charge to families making less than $50,000 annually and to individuals with yearly incomes under $25,000. More than 28,000 Illinois taxpayers filed returns through the program in the 2010 tax season, with more than $50 million in state and federal tax refunds returned to clients.
DHS also funds the Tax Assistance Program (TAP), which recruits tax professionals to volunteer to assist low-income families in 23 locations in Chicago and the suburbs. DHS also works with its clients and those who found jobs and have left DHS programs to educate them about tax preparation programs and ways to ensure they receive the maximum refund on their tax returns.
For more information on the Tax Counseling Project, contact the Center for Economic Progress in Chicago at 312-630-0273, or its toll-free statewide number 888-827-8511 or its website www.economicprogress.org. For information on the Tax Assistance Program call 312-409-1555 or 312-409- 4318 (Spanish). Details are also available on the IDHS website at www.dhs.state.il.us and the Department of Revenue website at www.revenue.state.il.us. Information about filing federal taxes online can be found at www.irs.gov.
About the New Illinois EITC Law:
The new law marked the largest increase in Illinois’ EITC since its inception in 2000, by phasing in a 5 percent increase over two years. The law boosts the state’s EITC from its current level at 5 percent of federal EITC, to 7.5 percent in tax year 2012 and 10 percent of federal EITC in tax year 2013. More than 2.5 million state residents benefited from the Illinois EITC in 2010.
Under the new law, a single mother with one child, earning minimum wage ($12,800 a year), will save $154 on her taxes. A married couple with three children earning $30,000 a year will save $199 on their taxes this year.
Uniquely pro-growth and pro-family, the EITC is available only to those with earned income and provides incentive to work as well as much-needed tax relief to the lowest-income families. EITC also boosts local economies through increased consumer demand. A 2006 Brookings Institution study found that every dollar a family saves through this tax credit translates into $1.58 of activity in local economies.
The law also improves the value of the standard personal exemption for all taxpayers in Illinois and ties its continued growth to the rate of inflation. The personal exemption will increase by $50 (to $2,050) in tax year 2012, and the value of the exemption will be indexed to the cost of living adjustment each tax year thereafter. The personal exemption change benefits all taxpayers, regardless of income.