In recent years, many states have created their own versions of the child tax credit (CTC) and earned income tax credit (EITC). Importantly, rather than simply replicating federal rules, states have used policy levers to design tax benefits that fit their own priorities and budgets.             

For example, eight states, including Maryland, have chosen to extend their EITCs to individuals under 25 years old and without qualifying children – groups excluded under federal EITC rules, which limit eligibility for these workers to ages 25 to 64. Also, federal tax benefits for workers without custodial children tend to be sparse.

The federal EITC has been shown to lift millions out of poverty each year, and states expanding their own credits’ eligibility can widen its income-boosting impacts. However, expanded eligibility will only be effective when all eligible residents know about these tax benefits and can easily access them. 

Our ongoing project in partnership with the Comptroller of Maryland offers important lessons on how to translate eligibility into access. We conducted expert interviews, analysis of de-identified state tax data, and six focus groups representing diverse sets of taxpayers. Policymakers, tax officials, and advocates, in Maryland and beyond, can use our findings to efficiently and effectively deliver tax benefits to young adults without custodial children.

Specific challenges to raising awareness among young adults about the EITC also reveal opportunities to improve tax filing and tax benefits access.

Stakeholders want to increase tax filing among young adults

Statewide government and non-profit leaders expressed the need for tailored youth outreach, such as having a regional representative in charge of youth outreach in the Comptroller’s office.

“We are really interested in developing partnerships where we see younger clients and find better solutions for younger clients, whether that's sharing free tax prep stuff with them or making educational resources just for them.” – Maryland leader

They hypothesized that since young adults may not know they are eligible for the state’s EITC, they don’t file taxes and can’t claim any benefits. Prior research on the federal EITC suggests that this outcome may hinge on how large the refund is.

“I think a lot of people think they're not making enough income to make it worth their while [to file taxes]. But if they knew they were getting that EITC, they would. I think it's a lot of younger people too who I just think haven't earned enough income to bother to file for that refund, even though it's like, ‘Why not?’ Because the EITC is like free money, it's your money.” – Maryland leader

Young adults want more ways to learn about taxes

Young adults (ages 18 to 24) without custodial children, in our focus group hosted in partnership with a local community organization in Howard County, shared insights that could help improve Maryland’s efforts to increase tax credit uptake. 

Participants, all of whom were likely to be eligible for the state’s EITC, shared that they were unaware of the state-level tax credits. This was understandable, because tax credits like the EITC largely benefit families with children, and are often advertised to primarily that population. Further, differences in credit eligibility between the state-level and federal-level credits can add to the confusion.

Many participants shared that they were in the process of becoming more independent. Some relied on their parents for financial support and had never filed taxes on their own. They stressed that the tax system was complex and confusing.

“I'm not really scared of filing my taxes. I'm just scared of doing it wrong. My mom's telling me ‘it’ll be worth doing it, let's do it.’ I'm ready to learn. It's just the part of making sure that I know what I’m doing.” – Young adult 

Participants emphasized that they wanted to learn more about taxes and tax filing but found most government websites unengaging and not user-friendly, requiring a lot of “clicks” to find useful information. They thought government officials could instead reach a younger audience through short informational clips on social media and on other platforms that appeal to them and make learning more entertaining.

They suggested outreach efforts through social media platforms they use regularly, like TikTok, Instagram, and YouTube. Participants said that repeatedly seeing information, including advertisements, across their social media would increase their interest. 

“I would probably make it like a community thing, like a page. Make a page. Put it on TikTok. They be having promotions on TikTok. Like they have a ‘for you page.’ You know what I'm saying? Just something like that.” – Young adult

Though they had recommendations for improving online experiences, participants also craved human interactions. Young adults liked the idea of having in-person community events and classes where they could learn about taxes. They mentioned tailoring resources for young people transitioning into adulthood and those resources could cover a variety of topics, including taxes, credit-building, or employment. 

In addition to education, young adults would like in-person tax filing supports. They would like to see personable tax preparers who could walk them through their tax returns. The desire for friendly and instructional tax preparers was a consistent theme across our focus groups.

“So, you know, just sit down and maybe ask them, you know like, ‘what's your mental state?’ Like just be human.” – Young adult

Effective expansion of tax credit eligibility requires intentional implementation 

Ample evidence suggests that expanding state tax credit eligibility to historically underserved populations can improve the well-being of residents. But these reforms require specific and new implementation strategies that meet the needs of many different groups. 

In total, our research shows communities respond to information sources and tax resources differently. For those transitioning into financial independence, our findings align with prior Urban Institute research emphasizing the need for simple communications and easier-to-use services, whether on digital platforms or in one-stop benefit hubs. 

Young adults without custodial children, like all the taxpayers we talked to, want more opportunities to learn how to file taxes and claim their benefits.