¿Tienes EITC? A Study of the Earned Income Tax Credit in Immigrant Communities

Alan Berube
Alan Berube Interim Vice President and Director - Brookings Metro

April 1, 2005


Analysis of ZIP code-level data from the IRS and Census 2000 reveals that:

  • Over half of all foreign-born individuals in the United States lived in just 5 percent of the nation’s ZIP codes in 2000. Most of these high-immigrant communities were located in major gateway states like California, New York, and Texas. Overall, 20 percent of their foreign-born residents lived below the poverty line, versus 16 percent nationally.

  • Twenty-one percent of families in high-immigrant communities received the EITC in tax year 1999, compared to 15 percent of families nationwide. Tax filers in these communities claimed $6.7 billion from the credit, more than one-fifth of total EITC dollars claimed that year. By tax year 2002, EITC dollars claimed in these same communities had risen to $7.8 billion.

Low-income working families in high-immigrant communities were more likely to use a paid preparer to file than those in other communities. However, EITC recipients in high-immigrant ZIPs were less likely than their counterparts elsewhere to claim their credit dollars via a refund anticipation loan (RAL).

Communities with moderate numbers of immigrants (between 2 and 13 percent of the population) may have lower EITC participation rates than communities with either high or low numbers of immigrants. In these areas, immigrants’ awareness of the EITC and other tax benefits may be lower due to a lack of targeted outreach, or to less active social networks among immigrants than may exist in high-immigrant communities.

To further harness the benefits of the EITC for immigrant families and communities, local leaders in the public and non-profit sectors should boost volunteer tax preparation capacity in high-immigrant neighborhoods, fund research on the economic impacts of the credit and related tax programs in these communities, and target EITC outreach to eligible immigrant families living in suburbs and other locales where the immigrant population is less concentrated.