150,000+ MILITARY FAMILIES WILL BENEFIT FROM EXPANDING ELIGIBILITY FOR EARNED INCOME TAX CREDIT

WASHINGTON, D.C. – Congresswoman Nancy Boyda (Kansas Second District) has introduced the Tax Relief for Armed Combat Families Act of 2007, which will permanently expand the eligibility of military families to receive the Earned Income Tax Credit (EITC). The legislation will cut the taxes of over 150,000 military families across the United States, in some cases by thousands of dollars.

Congresswoman Boyda said, "Our military continues to serve with honor and distinction. Thousands of Kansas soldiers currently serve in the face of danger and under the burden of combat. The last thing they need is to worry about paying higher taxes next year. Congress should pass immediate, permanent tax relief for military families."

The EITC was first enacted by Congress in 1975 to provide tax relief and supplemental income to low- and moderate-income families. Taxpayers whose earned income is less than an amount set by an eligibility formula – currently $36,348 for a married couple with two children – may receive tax credit or refund. Credits vary based on income and family size, ranging from less than $100 up to $4,536.

According to a 2005 Bell Policy Center study, at least 150,000 military families nationwide earn base incomes that qualify for the EITC, but their base wages are often supplemented by combat pay or certain other allowances or incentives. These special pays are generally not subject to taxation but do count as income for determining eligibility for programs like the EITC. As a result, many military families have, in the past, seen their EITC tax credit reduced or eliminated.

In 2001, Congress expanded EITC eligibility by permitting taxpayers to elect whether or not to include combat and other special pays in their earned income. The provision offered critical tax relief and support to military families, but under current law, it is set to expire on December 31, 2007.
Congresswoman Boyda's bill, the Tax Relief for Armed Combat Families Act of 2007, will eliminate the sunset date and make permanent the expanded EITC eligibility.