600 Income Security:Reduce Anti-Marriage Penalties in the Earned Income Tax Credit

Savings in Millions of Dollars
  • 2016
  • 2017
  • 2018
  • 2019
  • 2020
  • 2021
  • 2022
  • 2023
  • 2024
  • 2025
  • 2016-2020
  • 2016-2025


Savings were calculated by Heritage analyst Robert Rector, Senior Research Fellow in the Institute for Family, Community, and Opportunity.


Technical Notes on Scoring

CBO Baseline

Unless otherwise noted, calculations for savings for each recommendation relies on the most recent Congressional Budget Office baseline, as found in “An Update to the Budget and Economic Outlook: 2014 to 2024,” published August 27, 2014, has been used.

Savings “Totals”

While totals for the five and 10 year savings are provided by section and for the complete set of recommendations, there are two reasons they should not be viewed as representing total savings for The Budget Book.

First, as noted in the introduction, The Heritage Foundation would recommend that the savings realized in the Function 050 Defense section would stay within the Department of Defense to strengthen the nation’s defense capabilities.

Second, the numbers cannot be deemed to represent the realized savings if every single recommendation were adopted because policy changes made in one program can impact spending levels in other programs.  Thus, the numbers in the table do not reflect any potential interactions between the various policy changes affecting spending or savings.


Heritage Recommendation:

Restrict eligibility for Earned Income Tax Credit (EITC) payments to married parents, adoptive parents, and foster parents who reside with and support the child. Single parents who reside with the child and have formal legal custody would also be eligible. Eliminate eligibility for relatives of the child and parents who do not have legal custody. Adults who claim the EITC for dependent children must reside with the child. Requirements for documentation of residency should be strengthened. This proposal saves approximately $6 billion annually, and $60 billion over 10 years.


Change eligibility requirements for EITC payments.

The purpose of the EITC is to provide a refundable tax credit to low-income parents with children. To receive the credit, a person should have to be the actual custodial parent of the child. Non-custodial parents should not be eligible for the EITC. In the event of cohabiting, non-married parents should receive the credit based only on the mother’s income.

Erroneous overclaims equal between 29 percent and 38 percent of the dollar value of EITC claims. (( Internal Revenue Service, Compliance Estimates for the Earned Income Tax Credit Claimed on 2006–2008 Returns, Publication 5162
(8-2014), August 2014, p. 11. )) Refundable EITC payments in 2012 equaled some $52.6 billion; (( Internal Revenue Service, “SOI Tax Stats–Individual Statistical Tables by Size of Adjusted Gross Income, Individual Income Tax Returns with Earned Income Credit,” (accessed January 7, 2015). )) therefore the overclaim amount would be between $15 billion and $20 billion.

Roughly 20 percent of all EITC claims involve a qualifying-child error—cases in which the parent or the child or both are not eligible to receive the credit. (( Internal Revenue Service, Compliance Estimates for the Earned Income Tax Credit Claimed on 2006–2008 Returns, p. 21.))  About three-quarters of overclaims with qualifying-child errors involve false claims of residency. Many qualifying-child errors involve payments to relatives and non-custodial parents of the child, many of whom do not reside with the child. Restricting EITC eligibility and tightening residency documentation would reduce qualifying child errors and other unjustified payments.

Current qualifying child claim errors may cost taxpayers as much as $10 billion per year. We estimate savings could equal roughly 35 percent of the cost of qualifying child errors, or $3.5 billion per year.

Change eligibility requirements for EITC payments.

Contributing Expert

Robert Rector, a leading authority on poverty, welfare programs and immigration in America for three decades, is The Heritage Foundation’s senior research fellow in domestic policy.

See publications by Robert Rector

Robert RectorSenior Research Fellow

Heritage Expert

Rachel Sheffield focuses on welfare, marriage and family, and education as policy analyst in the DeVos Center for Religion & Civil Society at The Heritage Foundation.

See publications by Rachel Sheffield

Rachel SheffieldPolicy Analyst

Additional Reading