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Treasury OTA Releases Data on Family, Education Tax Credits

MAY 10, 2019

Treasury OTA Releases Data on Family, Education Tax Credits

DATED MAY 10, 2019

DOCUMENT ATTRIBUTES

Institutional Authors
Treasury Office of Tax Analysis
Code Sections
Section 24
Section 32
Section 25A
Section 21
Subject Area/Tax Topics
Credits
Jurisdictions
United States
Tax Analysts Document Number
2019-18745
Tax Analysts Electronic Citation
2019 TNT 93-23
2019 EOR 6-35
Magazine Citation
The Exempt Organization Tax Review, June 2019, p. 461
83 Exempt Org. Tax Rev. 461 (2019)

Families Benefiting from Major Family and Education Tax Credits
Tax Year 2019

Office of Tax Analysis
May 10, 2019

The first two tables show the number of families that benefit from or claim the key family and education tax credits for 2019 estimated using Treasury's Individual Tax Model (ITM). The ITM takes a stratified random sample of tax returns from a base year, forecasts the values of line items on the tax returns for 2019, and applies a very detailed tax calculator to analyze how changes in the tax system affect tax liability. The provisions examined are the earned income tax credit (EITC); the child credit, the additional child credit, and the other dependent credit (CTC, ACTC and ODTC respectively); the child and dependent care credit (CDCTC); the American opportunity tax credit (AOTC); and the lifetime learning credit (LLTC).

Table 1 answers for the key family and education tax credits under current law the questions: “How many families benefit from the provision(s) and what is the total amount of benefit and the average benefit per return?” The benefits are explored individually and in combination.

Table 2 answers for the key family and education tax credits under current law the questions: “How many families claim the provision(s) and what is the total amount claimed and average claimed per return?”

For any given provision, the amount of benefit in Table 1 is calculated by comparing estimated tax liability to what estimated tax liability would be in absence of the provision (but with the law otherwise unchanged). In some cases, the number of families benefiting (or the amount of benefit received) is smaller than the number of claimants (or the amount claimed) for a particular provision. This difference occurs in cases where some families would have chosen an alternate credit if the one under consideration were repealed. For example, in absence of the CTC, nearly all current claimants would switch to the ODTC. At most, taxpayers would see their taxes increase by $1,500 and not the full $2,000 per child. The number of credits claimed and the amount claimed shown in Table 2 also differ from the number of families benefiting shown in Table 1 because the estimates in Table 1 do not include dependent filers and ignore changes in tax of less than $5.

Tables 3 to 6 present greater detail for a subset of the lines in Table 1. These tables show the estimated benefit from the major provisions by adjusted gross income. The total benefit from all family and education credits is shown in Table 3. The combined benefit from the CTC, the ACTC, and the ODTC is shown in Table 4. The benefit from the EITC is shown in Table 5. The combined benefit from the AOTC and the LLTC is shown in Table 6.

Table 1
Estimated Benefit from Key Tax Provisions affecting
Families with Children and Education Expenses
Tax Year 2019
Counts and Amounts of Families who benefit from . . .¹	Total Families²(millions)	Total Value ($billions)	Average Benefit($)
Child Credit (CTC), Additional Child Tax Credit (ACTC) and Other Dependent Credit (ODTC)	49.4	121.1	2,448
Child Tax Credit and Additional Child Tax Credit	39.4	88.1	2,234
Additional Child Tax Credit (ACTC) (make ACTC nonrefundable)	22.0	38.2	1,740
Other Dependent Credit	15.4	9.7	628
Earned Income Tax Credit (EITC)	27.9	69.6	2,493
EITC Marriage Penalty Relief ³	4.5	3.7	824
EITC Students and Disabled (repeal EITC for qualifying children >18)	3.3	7.3	2,211
EITC for Families with Children	20.6	67.3	3,276
EITC for Families with No Children	7.4	2.3	308
Child and Dependent Care Tax Credit	5.9	3.2	551
Education Credits (AOTC and LLTC)	12.9	20.3	1,576
Lifetime Learning Credit (LLTC)	3.1	2.6	831
American Opportunity Tax Credit (AOTC)	9.9	12.4	1,243
Refundability of AOTC⁴ (make AOTC nonrefundable)	6.1	5.8	941
All Major Family and Education Credits⁵	64.1	215.9	3,366
Office of Tax Analysis	February 14, 2019
¹The tax benefits included in this table are the earned income tax credit (EITC), the child credit (CTC), the additional child tax credit (ACTC), the other dependent tax credit (ODTC), the child and dependent care tax credit (CDCTC), the American opportunity tax credit (AOTC), and the lifetime learning credit (LLTC). ²Dependent returns are excluded from the calculations. Returns are considered to benefit from a provision (or set of provisions) if income tax liability increases by $5 or more if the provision is (or provisions are) repealed. ³In 2018, the phaseout range of the EITC for joint filers begins at incomes $5,790 higher than for other filers ($5,800 for joint filers without children). ⁴Even though all 9.9 million families claiming an AOTC claim the 40% of the credit that is refundable, only families with insufficient tax liability to offset their full credit benefit from this refundability. Families that have sufficient tax liability would receive their full credit even without refundability, and are therefore not included among the 6.1 million families benefiting from refundability. ⁵The tax benefits included are the seven credits listed in fn 1.

Table 2
Number of Families Claiming and Amounts Claimed for Key Family Credits¹
Tax Year 2019
Tax Credit (numbers correspond to Tables 2-6)	Number of Families (Millions)	Amount Claimed ($Billions)	Average Claimed ($)
Total CTC, ACTC and ODTC	50.0	121.7	2,435
Total CTC + ACTC	39.5	110.9	2,807
CTC	30.0	72.7	2,423
ACTC	22.0	38.2	1,738
ODTC	17.2	10.8	626
Total EITC	28.0	69.6	2,488
EITC for workers with children	20.6	67.3	3,275
EITC for workers without children	7.4	2.3	305
Total CDCTC	6.7	3.9	580
Total Education Credits	13.1	21.1	1,611
LLTC	3.3	2.8	841
Total AOTC²	9.9	18.2	1,835
AOTC nonrefundable portion	7.3	8.6	1,166
AOTC refundable portion	9.9	9.7	974
Total EITC, CTC, ACTC & ODTC, CDCTC, & Educ. Credits	64.3	216.2	3,363
Office of Tax Analysis	February 14, 2018
¹The tax benefits included in this table are the earned income tax credit (EITC), the child credit (CTC), the additional child tax credit (ACTC), the other dependent credit (ODTC), the child and dependent care tax credit (CDCTC), the American opportunity tax credit (ACTC) and the lifetime learning credit (LLTC). Head of Household filing status is not included. The line numbers correspond to Tables 1-7. Lines that are not numbered (but begin with a bullet) do not correspond to an earlier table. ²As written in the statute, the AOTC is calculated in two pieces: 40% of the otherwise allowable AOTC is refundable and the remaining 60% is not refundable. Thus, all families claiming an AOTC receive the refundable portion of the AOTC but only those families with tax liability to offset are able to claim all or part of the nonrefundable portion of the AOTC. Of the 9.9 million families claiming an AOTC, 6.1 million would receive a smaller credit, or none at all, if the AOTC were not refundable.

Table 3
Estimated Benefit from All Family Credits
Earned Income Credit (EITC), Child Credit (CTC),
Additional Child Credit (ACTC), Other Dependent Credit (ODTC),
Child and Dependent Care Credit (CDCTC), Lifetime Learning Credit (LLTC),
and American Opportunity Credit (AOTC)
Tax Year 2019
Adjusted Gross Income	Families Benefiting (Thousands)	Total Benefit ($Millions)	Average Benefit ($)
0 <= 15,000	13,650	28,068	2,056
15,000 <= 30,000	13,210	62,466	4,729
30,000 <= 40,000	6,221	24,703	3,971
40,000 <= 50,000	4,728	16,246	3,436
50,000 <= 60,000	3,661	11,195	3,058
60,000 <= 75,000	4,129	13,026	3,155
75,000 <= 100,000	5,287	17,284	3,269
100,000 <= 200,000	9,611	32,564	3,388
200,000 <= 500,000	3,330	9,931	2,982
500,000 <= 1,000,000	96	64	661
1,000,000 <= 5,000,000	22	14	641
5,000,000 < *******	1	1	688
Total¹	64,135	215,852	3,366
Office of Tax Analysis	Feb 14, 2019
¹Returns with negative income are excluded from the lowest income class but included in the total line. Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are included in the calculations.

Table 4
Estimated Benefit from
Child Tax Credit (CTC), Additional Child Tax Credit (ACTC)
and Other Dependent Credit (ODTC)
Tax Year 2019
Adjusted Gross Income	Families Benefiting (Thousands)	Total Benefit ($Millions)	Average Benefit ($)
0 <= 15,000	4,981	5,570	1,118
15,000 <= 30,000	10,098	19,712	1,952
30,000 <= 40,000	5,254	13,051	2,484
40,000 <= 50,000	4,146	11,389	2,747
50,000 <= 60,000	3,319	9,112	2,745
60,000 <= 75,000	3,859	10,869	2,817
75,000 <= 100,000	5,066	14,424	2,847
100,000 <= 200,000	9,344	27,278	2,919
200,000 <= 500,000	3,303	9,507	2,878
500,000 <= 1,000,000	11	11	1,034
1,000,000 <= 5,000,000	0	0	0
5,000,000 < *******	0	0	0
Total¹	49,449	121,061	2,448
Office of Tax Analysis	Feb 08, 2019
¹Returns with negative income are excluded from the lowest income class but included in the total line. Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are included in the calculations.

Table 5
Estimated Benefit from
Earned Income Tax Credit (EITC)
Tax Year 2019
Adjusted Gross Income	Families Benefiting² (Thousands)	Total Benefit ($Millions)	Average Benefit ($)
0 <= 15,000	12,052	20,288	1,683
15,000 <= 30,000	9,569	38,303	4,003
30,000 <= 40,000	4,064	8,601	2,117
40,000 <= 50,000	1,850	2,166	1,171
50,000 <= 60,000	272	125	459
60,000 <= 75,000	0	0	0
75,000 <= 100,000	0	0	0
100,000 <= 200,000	0	0	0
200,000 <= 500,000	0	0	0
500,000 <= 1,000,000	0	0	0
1,000,000 <= 5,000,000	0	0	0
5,000,000 < *******	0	0	0
Total¹	27,920	69,595	2,493
Office of Tax Analysis	Feb 11, 2019
¹Returns with negative income are excluded from the lowest income class but included in the total line. Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are included in the calculations. ²In 2019, the phaseout range of the EITC for joint filers begins at incomes $5,790 higher than for other filers ($5,800 for joint filers without children).

Table 6
Estimated Benefit from American Opportunity Credit (AOTC)
and Lifetime Learning Credit (LLTC)
Tax Year 2019
Adjusted Gross Income	Families Benefiting (Thousands)	Total Benefit ($Millions)	Average Benefit ($)
0 <= 15,000	2,314	2,192	947
15,000 <= 30,000	3,018	3,812	1,263
30,000 <= 40,000	1,434	2,198	1,533
40,000 <= 50,000	1,181	2,137	1,809
50,000 <= 60,000	849	1,599	1,883
60,000 <= 75,000	918	1,833	1,997
75,000 <= 100,000	1,160	2,371	2,043
100,000 <= 200,000	1,997	4,164	2,085
200,000 <= 500,000	0	0	0
500,000 <= 1,000,000	0	0	0
1,000,000 <= 5,000,000	0	0	0
5,000,000 < *******	0	0	0
Total¹	12,912	20,349	1,576
Office of Tax Analysis	Feb 14, 2019
¹ Returns with negative income are excluded from the lowest income class but included in the total line. Dependent returns are excluded from the calculations. Returns with a tax change of at least $5 are included in the calculations.

DOCUMENT ATTRIBUTES

Institutional Authors
Treasury Office of Tax Analysis
Code Sections
Section 24
Section 32
Section 25A
Section 21
Subject Area/Tax Topics
Credits
Jurisdictions
United States
Tax Analysts Document Number
2019-18745
Tax Analysts Electronic Citation
2019 TNT 93-23
2019 EOR 6-35
Magazine Citation
The Exempt Organization Tax Review, June 2019, p. 461
83 Exempt Org. Tax Rev. 461 (2019)

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