But there’s good news: State leaders have powerful tools to help. Among the most effective are state versions of the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC). The federal versions of these tax credits lift millions of families above the poverty line. Recognizing their impact, many states have created their own versions to supplement the federal credits. Yet these benefits only work if people are aware of them and take advantage of them.
Maryland’s recent campaign to promote its state tax credits offers lessons for other states that want to help residents keep more of what they’ve earned.
Why Eligible Households Don’t Claim Tax Credits
The numbers are striking. The average federal EITC is $2,743 and Maryland’s average state EITC refund is another $1,100. The federal CTC provides up to $2,200 per qualifying child, while Maryland’s version offers an additional $500 per child.
For low-income residents, these credits can mean the difference between falling behind and staying afloat. Even a savings cushion of as little as $250 to $749 has been found to make it less likely for a family to be evicted or miss a housing or utility payment. But every year, thousands of eligible residents miss out.
In Maryland, an estimated 97,000 eligible tax filers didn’t claim the state EITC during the 2023 tax season. Why? Many simply didn’t know the credits existed or had trouble navigating eligibility rules and feared getting their taxes wrong.
What’s more, that 97,000 number doesn’t include those who might have been eligible but didn’t file taxes at all. Some reported that they couldn’t afford tax preparation services or didn’t know they were eligible for income-boosting tax benefits. But even households not required to file taxes because their incomes are too low can still claim these credits if they file.
How Maryland Is Boosting Uptake
To tackle this challenge head-on, in January the Maryland comptroller’s office launched the “Earned It” campaign, an effort to raise awareness of the state’s EITC and CTC. Through letters, emails, agency websites and community events, the campaign reached out directly to low-income Marylanders. The result: a 7.8 percent increase in EITC filers compared to the previous year.
The comptroller’s office also collaborated with the Urban Institute to better understand the barriers preventing families from claiming their credits and how to overcome them. Urban’s research helped Maryland identify the communities and counties where outreach efforts should be focused and was the basis for a playbook that state leaders across the country can use to boost uptake.
Among the strategies described, Urban found that effective outreach campaigns should get information out year-round, not just during tax season. States should communicate across multiple channels — including local news, social media, mailers and in-person events — with multilingual materials to reach a wide swath of communities.
Additionally, states can reach more people by partnering with trusted messengers, like nonprofits and community leaders, and by expanding access to free tax preparation services. In Maryland, for instance, the comptroller’s office worked with the governor and the legislature to increase funding for federal Volunteer Income Tax Assistance (VITA) programs.
Refining Outreach Strategies
Maryland is moving into the next phase of the “Earned It” campaign with these insights, using strategies that other states can adopt. This year, the comptroller and partners in the governor’s office will leverage Urban’s research findings to refine their outreach approach, deploy new tactics and messaging, user-test dissemination materials, train additional trusted messengers and direct more resources to the individuals and communities that could benefit most. For example, Maryland will pair information about state tax credits (eligibility and benefits) with information about free tax-filing services in outreach materials and customize these materials for different demographic groups and geographic areas.
Maryland’s success so far proves that boosting uptake doesn’t always require large new investments. States such as Colorado, Illinois, Indiana, Minnesota and Virginia are also expanding their tax credits and investing in outreach. Community organizations, advocates and VITA sites are stepping up to spread the word and support residents.
With tax season around the corner, states have a critical opportunity to help families keep more of what they’ve earned. At a time when affordability is one of the biggest challenges facing American households, tax credits are a proven bipartisan solution that puts money back in people’s pockets — where it belongs and is most needed.
Sarah Rosen Wartell is the president of the Urban Institute. Brooke E. Lierman is the comptroller for the state of Maryland.
Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
