Wisconsin’s Earned Income Tax Credit Helps Keep Rural Families Out of Poverty
An important tax credit helps many working families in rural Wisconsin, giving an economic boost to less populated areas of the state.
Families all across Wisconsin receive the Earned Income Tax Credit (EITC), but people living in rural areas are most likely to benefit from the credit. In 2011, one out of every seven Wisconsin people living in rural areas directly benefitted from the state EITC.
Putting Money in the Pockets of Rural Families
Wisconsin’s EITC is an important resource for working families in rural and northern Wisconsin, where incomes are lower than in more urban areas of the state.
Wisconsin families in rural areas are more likely than families in metropolitan areas to benefit from the EITC. More than 15% of people living in rural areas of Wisconsin benefit from the credit, compared to 13.6% of people living in metropolitan counties, and 13.2% of people living in micropolitan counties, as shown in Table 1. (Definitions of those terms are on the following page.)
Taxpayers in rural counties received $24.1 million in tax relief from Wisconsin’s EITC, pumping money into the economy of rural Wisconsin. More than 113,000 children in rural areas lived in families that received the EITC in 2011.
The share of individuals who benefit from the EITC range from a high of 39.4% in Menominee County to a low of 6.0% in Ozaukee County. Of the five counties with the highest share of residents benefitting from the EITC, four are rural counties, as shown in Table 2. The map on the next page shows that rural counties clustered in the northern part of the state have high percentages of people who benefit from the EITC.
Wisconsin’s EITC benefits taxpayers who work, have children, and earn less than about $45,000 per year. The amount of the credit depends on income and the number of children in a family, with a maximum credit amount of about $2,000.
Fending off a Tax Hike on Rural Working Families
The Governor and some legislators have said that making significant changes to Wisconsin’s income tax system is a top priority for the new legislative session. Policymakers should remember that any cut to the Earned Income Tax Credit amounts to a tax increase on working families. This tax increase would fall especially hard on families in rural Wisconsin.