Oregon Continues to Lag in the Number of Families Claiming Their Earned Income Tax Credit

A recent report concluded Oregon ranked third to last in the amount of eligible U.S. families redeeming their Earned Income Tax Credit in 2016.

That tax credit is a leading anti-poverty strategy that draws from both federal and state funds to support low-income households. Oregon has fallen near the bottom of the list for nearly a decade now.

According to the report by the Oregon Center for Public Policy, these households collectively lost $137 million in unclaimed EITC dollars in 2016; more than one in four did not claim the credit and only 73.4 percent of those eligible participated. That year, credits averaged $2,268 per Oregon family.

Not only does this impact each household, but the report noted Oregon's economy lost out on around $127 million in federal funds that year. Each federal EITC dollar is estimated to result between $1.40 and $1.58 in the local economy — meaning this caused the state to leave a lot of money on the table.

The report lists several factors that contribute to this unused credit, including a lack of awareness and overall confusion due to the complex forms and process. The state needs to do more to remove these barriers, the report says.

"It's crucial that low-income families know that they can use this tax credit to increase their take-home pay," Janet Bauer, a policy analyst for OCPP, said in a statement. "But it's also important that Oregon recognize that there are barriers in the way of families claiming this vital tax benefit."

Below Oregon, the District of Columbia and Alaska fared lowest in 2016 EITC participation. Rhode Island, Vermont and South Dakota topped the nationwide list.

OCPP is encouraging lawmakers to increase EITC outreach efforts, invest in free tax preparation services and streamline the process so it's more user friendly for eligible residents.

"We're not capturing the full benefits of the EITC, including reduced poverty, better health for families, improved academic achievement for children, and even a boost to local economies," said Bauer in a statement. "Low wage families and Oregon as a whole would be better off if the state did more to remove the obstacles that get in the way of families accessing this tax credit."