State Earned Income Tax Credits: How Yours Works
About 31 states plus the District of Columbia pay their own Earned Income Tax Credit on top of the federal one, and the design varies more than most people expect. Here is how the three models differ, why refundability decides whether you see any money, what a mid-year move actually does, and how to confirm your state's number against the only source that controls.
What a state EITC is
A state Earned Income Tax Credit is a state-level credit for working households, paid on top of the federal Earned Income Tax Credit. In most states it is built directly on the federal credit: you claim the federal EITC on your federal return, carry that number to a line on your state return, and the state applies its own percentage. There is usually no separate application and no separate eligibility test, which is why the state credit is the most commonly missed part of the whole thing. People who correctly claim the federal credit still leave the state credit behind by not filing a state return.
That design has a consequence worth understanding before anything else: in a percentage-of-federal state, your state credit rises and falls with your federal one. If the IRS disallows the federal credit, the state credit generally goes with it. If your federal credit is reduced because a qualifying child went to someone else under the tiebreaker rules, the state credit shrinks by the same proportion. The federal analysis is doing nearly all of the work.
The three things that actually vary state to state are the percentage, whether the credit is refundable, and how the state treats a year in which you moved. Those are the three sections that follow.
Which states have one
Roughly 31 states, plus the District of Columbia and Puerto Rico, operate a state or local Earned Income Tax Credit. Some cities and counties run their own on top of that. The jurisdictions with a state-level credit are:
Why this page does not print a percentage table
State EITC percentages change more often than almost any other number in individual tax, and the third-party tables that aggregate them are frequently a year or more behind. Two recent examples make the point. New York's credit had been set at 30% of the federal credit for years and rises to 45% for tax years beginning on or after January 1, 2026. South Carolina's credit is widely listed as 125% of the federal credit with no cap, but 2026 Act 110 capped it at $200 per filer. A reader who trusted a stale table in either state would be materially wrong. The reliable method is in the section below, and it takes about two minutes.
The absence of a state EITC does not mean a state has nothing for working families. Several states without one run a child tax credit, a sales-tax or grocery credit, or a property-tax circuit breaker aimed at the same households. And nine states levy no broad individual income tax at all, so there is no state return for a credit to sit on.
The three designs, and why it matters
State credits fall into three structural buckets. Knowing which one you are in tells you where to look for your number and what can change it.
Percentage of the federal credit (the large majority)
The state takes your federal EITC and multiplies by a fixed percentage. Michigan at 30% is a clean example: one line for the federal credit, one line for the state result. The advantage for filers is that eligibility is settled entirely by federal law, so there is nothing extra to prove. The exposure is that any federal adjustment flows straight through to the state.
Tiered or targeted percentages
Some states apply different rates to different filers rather than one flat match. A state may pay a higher percentage to households with a young child, or scale the rate by income. Oregon, for instance, pays a higher rate to filers with a child under three than to everyone else. In these states a single headline percentage is misleading, because the rate that applies to you depends on your family facts.
Independently computed credits
A few states do not peg to the federal credit at all. They run their own schedule with their own income ranges and their own phase-out, so the state credit has to be calculated on its own worksheet. California, Minnesota, Washington, and Wisconsin are the usual examples. Here you cannot shortcut by multiplying the federal number, and a filer who is ineligible federally may still qualify at the state level, or the reverse.
One more variable cuts across all three: who may claim. Federal EITC requires a valid Social Security number, but several states extend their credit to filers who file with an ITIN, which matters a great deal in immigrant households. That is a state-law choice, so it is another item to confirm on your own state's instructions rather than assume from the federal rules. Our ITIN service page covers the Form W-7 side of that.
Refundable or not: the question that decides your money
This is the difference between a credit that pays and a credit that only discounts. It matters more than the headline percentage, and it is the thing most often skipped over.
Refundable
The credit first offsets your state tax, and the state pays you whatever is left over. A household with no state tax liability still receives the full credit as a refund. Most state EITCs are built this way, which is the point of the policy: the target households often owe little or no income tax to begin with.
Nonrefundable
The credit can only reduce tax you actually owe, down to zero, and any excess is lost. A large-sounding nonrefundable percentage can therefore be worth very little to the households the credit is nominally aimed at, because a filer with no state tax liability has nothing for it to offset. Several states run their credit this way. If yours is one of them, the percentage tells you almost nothing until you know your state tax liability.
A practical consequence: in a refundable state, filing is worth it even at very low income, because the credit arrives as cash. In a nonrefundable state, the state credit may add nothing, but you should still file for the federal credit, which is refundable everywhere. Either way the federal claim is the one that reliably pays.
Moving states: the rule most people get backwards
If you moved into or out of a state during the year, the natural assumption is that your state credit shrinks in proportion to the part of the year you lived there. Sometimes that is right. Often it is not, and the assumption is one of the most reliable sources of a wrong number on a part-year return.
Residency as an eligibility test
In some states, residency decides only whether you may claim, not how much. If you qualify, the state applies its percentage to your full federal credit with no income-ratio adjustment. Michigan is a documented example: the statute sets the credit as a percentage of the federal credit with no apportionment term, and Treasury states that a resident or part-year resident does not need positive Michigan taxable income to qualify.
The trap: a form that prorates something else
Part-year and nonresident returns almost always carry a schedule that splits income between the state and everywhere else and produces a percentage. It is easy to assume that percentage applies to every credit on the return. Frequently it does not: it may be scoped to the exemption allowance or to specific deductions. In Michigan, the Schedule NR percentage feeds the exemption allowance, and Schedule NR has no earned income credit line on it at all. Reading the schedule as a general credit-proration rule produces a credit that is too small.
States that genuinely do apportion
Other states really do scale the earned income credit itself by a residency or source-income ratio, and say so in the credit's own instructions. The distinguishing feature is that the proration appears in the instruction for the credit line, not merely in a general apportionment schedule elsewhere on the return. That is the text to find before you accept any number.
Two related situations deserve the same care. Reciprocal-state commuters, whose wages are taxed by the home state rather than the state where they physically worked, can end up with no state-source income for the work state to build a credit on. And couples filing jointly where the spouses had different residency statuses often land on a special worksheet, which again may be computing the exemption allowance rather than the credit. Our Michigan EITC guide works one state through end to end, including exactly this distinction.
How to find your state percentage without guessing
Skip the aggregator tables. The controlling source is your own state's return and instruction booklet for the tax year you are filing, and it answers all three questions at once:
- Open your state revenue department site and pull the individual income tax return and instruction booklet for the tax year you are filing, not the current calendar year. The two differ for most of the filing season.
- Find the earned income credit line on the return itself. In a percentage-of-federal state the arithmetic is visible right there: one line takes your federal credit, the next applies the state rate.
- Read that line's narrative instruction in the booklet. This is where a genuine proration rule for part-year residents or nonresidents would appear, and where any cap or dollar limit would be stated.
- Confirm refundability by finding which block of the return the credit sits in. A credit in the refundable-credits section pays out with zero tax due; one applied against the tax computation does not.
If your income qualifies you for free preparation, that route handles the state return alongside the federal one. Our guide to filing taxes for free covers the options, including VITA volunteer sites, which prepare federal and state returns together at no charge and are used to state credit questions.
Missed years and amended returns
A state credit you never claimed is often still recoverable, and the deadline is not necessarily the federal one. The general federal window to claim a refund runs three years from the original due date of the return. State refund statutes run separately and some are longer, which produces a situation worth knowing about: the state credit can still be open for a year whose federal refund window has already closed.
Two clocks, checked separately
Michigan is the clearest illustration: its refund statute gives four years from the original due date, so a filer who never claimed the state credit can still be inside the state window after the federal one has run out. Whether that holds in your state depends on your state's own statute of limitations. The practical rule is to have both windows checked for the specific years in question rather than assuming the federal deadline governs everything.
One caution before amending. Where a state has raised its credit retroactively, it has sometimes paid the difference automatically and told filers explicitly not to amend for it. Amending is for a credit you never claimed or facts that were wrong, not for a rate change the state is already handling. Check the state's guidance on the specific change before filing anything.
Frequently asked questions
Primary sources
- Internal Revenue Code section 32; IRS Earned Income Tax Credit eligibility rules and annual tables at irs.gov and eitc.irs.gov.
- IRS, "States and Local Governments with Earned Income Tax Credit," the agency's own list of jurisdictions operating a state or local credit.
- Each state revenue department's current-year individual income tax return and instruction booklet, which is the controlling source for that state's percentage, refundability, and residency treatment.
- MCL 206.272 (Michigan EITC statute) and the MI-1040 return and instructions, used here as the worked residency example.
- New York Tax Law section 606(d) and the IT-215 earned income credit instructions; South Carolina Code section 12-6-3632 as amended by 2026 Act 110.
Disclaimer: This guide is for general informational purposes only and is current as of its publication date. Tax laws change frequently. Please consult a qualified tax professional for advice specific to your situation.
Moved states, shared custody, or a year you never claimed?
State earned income credits are simple until residency, custody, or a missed year complicates them. Arc & Ledger is led by an Enrolled Agent enrolled to practice before the IRS: we prepare federal and state returns together, get the part-year treatment right rather than assumed, and review prior years while the refund windows are still open. Book a free 15-minute consultation to talk it through.
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Disclaimer: This guide is general information, not tax advice for your specific situation. Tax law changes, and how a rule applies depends on your facts. Reading this page does not create a client relationship with Arc & Ledger LLC. Before acting on anything here, confirm how it applies to your circumstances with a qualified tax professional.