Study Finds Millions of Low-Income Families Missing Tax Credits Due to Filing Barriers

Many low-income families in the U.S. miss out on critical tax credits like the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) due to lack of awareness, misunderstandings about eligibility, fear of filing mistakes, and the high cost of tax preparation. Surveys show that a significant portion of households earning under $26,000 do not file taxes because they believe their income is too low, even though many are eligible for these credits, which can provide substantial financial relief. The tax filing process is often seen as overwhelming and costly, with difficulties in document gathering further hindering access. Expanding and simplifying access to these tax credits is widely recognized as a crucial measure to support families, especially given the millions of children and households excluded from benefits due to restrictive policies. Recent legislative proposals aiming to raise the CTC have also introduced eligibility exclusions that disproportionately affect immigrant and mixed-status families, potentially cutting off benefits for millions of children. Experts emphasize the need for a multi-pronged strategy involving personalized outreach, streamlined systems, and inclusive policies to ensure these critical supports reach the families that need them most.