Senators Casey, Murray and Warren introduce Foster EITC Act to expand important tax credit for former foster youth

Child Abuse & Neglect
Tax Policy

In late November, Senators Bob Casey (D-PA), Patty Murray (D-WA), and Elizabeth Warren (D-MA) introduced the Foster EITC Act, a bill intended to increase the earned income tax credit (EITC) for childless adults by expanding age eligibility for youth formerly in foster care to 18 and the childless EITC to 21 for all working Americans. The EITC is a critical federal tax credit for low- and moderate-income working individuals and families. It is currently not available to workers under the age of 25 unless they are raising children.

In 2014, the EITC (along with the Child Tax Credit) lifted nearly 10 million Americans out of poverty – including nearly 5 million children. This credit is a lifeline, helping families to meet basic needs and allowing them to build savings for the future. Even so, the EITC still does not reach many who need it, and even for some families who can claim the credit, it is not enough to lift them out of poverty.
This is certainly true for youth formerly in care, who by age 24 earn between half and a quarter of the earnings of their non-foster care peers. Most are not living with a biological or foster parent, and often lack the financial support that many other young adults receive. They face many barriers to achieving economic security, including lack of stable housing, education, and other supports.

Over 23,000 children age out of the foster care system each year and need services to thrive as adults. They often lack assistance with enrolling in college, finding employment, obtaining health coverage, securing housing, and managing money. Most young adults, whether they were in foster care or not, need support during this time from parents and mentors to navigate complex systems and become self-sufficient. Youth in foster care could greatly benefit from additional services and supports to help them overcome the inevitable barriers faced by all young adults and the unique challenges experienced in care.

This legislation, among other things, would help youth formerly in care by lowering the age that former foster youth could claim the EITC from 25 to 18. This would help youth who exit care and on their own – often these youth have earned income but are still struggling to make ends meet. By allowing youth formerly in care to claim the credit during the time they are transitioning to adulthood, it helps to create parity with young adults of the same age that are fortunate enough to be receiving financial support.

Specifically, the Foster EITC Act modifies the earned income tax credit to:

  • Reduce from 25 to 18 the qualifying age for youth formerly in foster care, and to age 21 for all childless adults
  • Make permanent the increase in the rate of such credit for taxpayers with three or more children
  • Increase the credit for taxpayers with no qualifying children
  • Revise eligibility rules relating to married individuals living apart and qualifying children claimed by another family member

You can find our letter of support for the bill here.


How Foster EITC Act helps former foster youth: http://bit.ly/1SxqWAL v/ @Campaign4Kids #InvestInKids
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