#BuildBackBetter: Why LGBTQ+ Families Need Refundable Tax Credits

By: Gabrielle Avellaneda

We need to ensure that those most in need of benefits are able to receive them. The #BuildBackBetter Plan proposed by the Biden-Harris administration extends three refundable tax credits that benefit lower- and middle-income workers and families including the Earned Income Tax Credit and the Child and Dependent Care Tax Credit. Keep reading to learn more about how #BuildBackBetter legislation can help our families—and what you can do to support it. Additionally, check out our blog on why we need an expanded Child Tax Credit.

What is a “refundable” tax credit?

If a tax credit is “refundable,” it is provided to families and individuals in need even if they do not owe taxes or if they pay less in taxes than the credit is worth. Many tax credits do not reach most low-and middle-income families who are otherwise eligible because they simply don’t earn enough. By making tax credits refundable, we ensure that those most in need receive these critical benefits.

What is the expanded Earned Income Tax Credit (EITC)?

The EITC helps low- to moderate-income workers and families get a tax break. When the American Rescue Plan (ARP) was signed into law on March 11, 2021, it made the EITC more generous and available to more workers.

Specifically:

Before ARP, people with very low incomes who did not have children or whose children did not meet the criteria to be claimed for EITC were only eligible to claim a very modest EITC ($540 maximum in Tax Year 2020)
For Tax Year 2021, ARP raises this maximum to $1,502. It also lifts the income cap so more workers qualify for the credit.
- For example, a childless worker who works 30 hours per week at $9 per hour earns income that, after taxes, leaves them below the federal poverty line. By increasing their EITC to more than $1,100, this EITC expansion helps pull such workers out of poverty.
ARP expands eligibility to workers ages 19+

Under the #BuildBackBetter plan, the expanded Earned Income Tax Credit would be made permanent!

How would #BuildBackBetter’s permanent expansion of the Earned Income Tax Credit help LGBTQ+ families?

The EITC will provide income support to approximately 17 million low-wage workers. This is a segment of the workforce in which LGBTQ+ community members are overrepresented. In fact…

About 1 in 5 LGBTQ people live in poverty (22% compared to an estimated 16% among non-LGBTQ+ counterparts).
According to the Movement Advancement Project (MAP), nearly two-thirds (64%) of LGBTQ households faced job or wage disruption during the pandemic compared to 45% of straight households.

What’s more, the expanded EITC eligibility gives a boost to younger LGBTQ+ individuals that may be struggling with student loan debt, unemployment, or housing issues.

What is the expanded Child and Dependent Care Tax Credit in #BuildBackBetter?

The Child and Dependent Care Tax Credit is the only federal tax credit that specifically addresses the additional care expenses that parents incur when they work, look for work, or (in some cases) go to school.

Specifically:

The credit covers expenses for child or dependent care, allowing parents to work or look for work. Expenses may include the cost of:
- An in-home babysitter or nanny;
- Family, friend, or neighbor (FFN) care;
- Home-based child care;
- Child care centers; and
- Before- or after-school care
Families will receive a tax credit for as much as half of their spending on qualified child care for children under age 13. This could add up to a total of $4,000 for one child or $8,000 for two or more children.
A 50% reimbursement will be available to families making less than $125,000 a year. Families making between $125,000 a year and $400,000 a year will receive partial credit with benefits at least as generous as those they receive today

Under #BuildBackBetter, the expanded Child and Dependent Care Tax Credit would be made permanent!

Why do LGBTQ+ families need a permanent expansion of the Child and Dependent Care Tax Credit?

This one’s easy: Because nearly 1 in 5 children of same-sex couples overall and 1 in 3 children of Black or Latinx same-sex couples live in poverty compared to 1 in 7 children of opposite-sex couples.

What can you do to help?

The bold solutions outlined above will help all families—especially LGBTQ+ families and families from communities that have been historically oppressed—survive and thrive in the wake of the COVID-19 pandemic.

So, we need your help to get this plan enacted! With this simple tool, you can reach out to your members of Congress and urge them to support #BuildBackBetter legislation to address the needs of LGBTQ+ people, families, and communities!