New study suggests working families with low income spend their tax credits on basic needs such as bills, debt, housing and transportation

Jul 25, 2023

Eligible working families with low income that have children can receive the earned income tax credit, commonly known as the EITC, annually in the form of a lump-sum federal tax refund averaging about $2,500. Little was known about how families spend their EITC funds and the mechanisms for how this credit supports improved health outcomes. University of California researchers conducted a large survey of nearly 250 California families that received the EITC in 2020-2021. Families spent their refunds on basic needs. Half of the families surveyed reported spending their EITC refund on bills, debt or housing, over a third reported spending it on transportation and only 3% reported spending it on healthcare costs. Family recipients that were thirty years old and older were more likely to spend their EITC refund on bills and paying down debt than younger households. Researchers suggested the EITC may support improved healthy by providing families with more money to spend on nutrition and healthcare and may lower family stress by generally increasing household resources. Findings were published in the journal BMC Public Health by Rita Hamad and Kaitlyn Jackson from the University of California, San Francisco, Joseph Yeb from Tufts University, Wendi Gosliner from the Nutrition Policy Institute at the UC Agriculture and Natural Resources, and Lia Fernald from UC Berkeley. This project is part of the Assessing California Communities' Experiences with Safety Net Supports (ACCESS) study which was funded by the Robert Wood Johnson Foundation, Tipping Point Foundation, the UC Office of the President, and the Berkeley Population Center at UC Berkeley.


By Danielle Lee
Author - Director of Communications & Research Engagement
By Wendi Gosliner
Editor - Project scientist