As a state tax and budget nerd, I celebrate a few different holidays each year. I get giddy at Michigan’s twice-a-year Consensus Revenue Estimating Conference, and I regularly share “Happy New Year” texts with friends on Oct. 1 — the start of the new budget year. And just last week, I celebrated Tax Day on April 15.

It’s important to recognize the good things we do through taxes. Tax Day is a day when I recognize the collective impact we have by paying taxes, supporting things we all rely on like child care, health care, and public education. But it’s also a day when I celebrate the good we do for Michigan families directly through our tax code — like the Earned Income Tax Credit.

The Earned Income Tax Credit (EITC) is a refundable federal tax credit available to people who work but have low incomes; Michigan — like most other states — supplements this credit with its own state credit that benefits Michigan families in every county. For years, Michigan’s EITC was set at 6% of the federal credit — among the lowest benefits in the country.

But legislation passed in early 2023 quintupled our credit to 30% of the federal credit.

For perspective on this boost, a single parent with one kid working full time earning Michigan’s minimum wage in 2024 ($10.33 per hour) would expect to receive a federal credit of about $4,213 when they filed their taxes earlier this year. At 30% of the federal credit, they would also receive a state EITC of about $1,264. Had our credit still been equal to 6%, this family’s state credit would be just $253. Instead, they’re getting over $1,000 more back in their pockets to put toward the things they need.

And we’re starting to see the results roll in. For tax year 2023 — what folks filed by April 2024 — about 640,400 Michigan families statewide, or roughly 14% of state tax filers, benefited from an EITC averaging nearly $840. Uptake of the credit ranged from as low as 6.4% in Livingston County to as high as 21.7% in Wayne County, and average credits ranged from $584 to over $1,000.

In the Alpena area, 13.8% of total filers in the four counties of Alcona, Alpena, Montmorency, and Presque Isle benefit from the EITC, with average credits ranging from $711 to $729.

Decades of research point to the benefits of the EITC. It offsets the high taxes that families with low incomes pay, such as property and sales taxes, and helps them make ends meet. It allows families to pay for daily necessities, like groceries, housing, child care, or transportation. It has positive, long-lasting benefits on children, and it is one of the most effective tools to pull people out of poverty.

This money has a real impact. In the Alpena area, families that receive the EITC can put their credit toward daily costs, covering more than 120 cartons of eggs, nearly a month of rent or child care, or up to four months of electricity bills. But it could also be used toward a big expense: new tires, replacing a failing appliance, covering the cost of an unexpected health scare, or paying down debt. The EITC helps families reduce financial stress by providing a much-needed cushion.

What’s more is that families receiving the EITC have a direct impact on the local economy, since they tend to use the credit in the communities in which they live or work. This means that nearly $3.1 million total was put back into the local economy in Alcona, Alpena, Montmorency, and Presque Isle counties. That’s nearly $3.1 million at local grocery stores, child care providers, repair shops, restaurants, and more.

We can always do better. Nearly one in five eligible Michigan families don’t claim the credit. And because state eligibility mirrors federal rules, many workers who earn low wages and do not have children — such as youth exiting foster care, young workers just starting out, or older workers — are left out. Immigrant workers who work and pay taxes but file with an Individual Taxpayer Identification Number instead of a Social Security Number are also excluded.

So we have things to fix. But every day, and especially on Tax Day, I celebrate the good our tax code does for Michigan families and the state as a whole.

Rachel Richards is the fiscal policy and government relations director with the Michigan League for Public Policy.