Under the District’s Brand New Monthly Basic Income Program, EITC-eligible Families Need Only File Taxes to Be Enrolled Automatically in Receiving Monthly Cash Payments from the District

As Tax Day approaches this coming Tuesday, April 18, District residents, especially those who are parents and earned around $10,000-$40,000 last year, are at risk of leaving money on the table if they don’t file their tax return.

That’s because the District’s first ever Monthly Basic Income program is underway this tax year. Through the program, the District is making a significant investment in low-wage families in the form of monthly cash payments. Enrollment is simple, but eligible families who don’t file their taxes will miss out.

“The most important point is this: folks who might not otherwise file their taxes should this year, because they’re leaving money on the table if they don’t. Money that can be used for diapers, for school uniforms, for food, for car repairs or Metro fare – whatever is most urgent in their monthly budget,” said Councilmember Charles Allen, who championed the Monthly Basic Income as part of the Hearts and Homes Amendment Act that passed two years ago. “We’re not talking about a pilot program or a grant. This is here to stay, and it’s a change that’s going to help tens of thousands of DC families struggling to make ends meet right now.”

Residents can learn more by visiting https://eitc.dc.gov/ or calling 202-759-1931.

The program is an expansion of the successful Earned Income Tax Credit, which provides a tax rebate to filers who are low-wage and have children (with some exceptions for single filers).

The challenge? There are thousands of low-wage residents who are eligible but might leave money on the table because they don’t have to file their taxes if they are below the filing threshold. It is very likely many of these same families saw a significant decrease beginning last month in their SNAP benefits as the federal government ended pandemic increases. The average family is expected to have lost an average of $82 per month from their benefits.

The District’s new Monthly Basic Income program could help buffer that loss for some families with monthly checks ranging from $50-250 every single month. And all they have to do is file their taxes.

Here’s how it works: currently, there is a local, District-funded match for the federal Earned Income Tax Credit that is issued annually. That local match helps increase the return for low-income families who file their taxes.

As part of the Hearts and Homes Amendment in the FY22 budget, Councilmember Allen fought to dedicate $30 million more to low-income households through that local match of the federal EITC. That match will grow to $50 million in the coming years and will be the most generous match in the nation. There is no end date for the program.

To enroll, eligible families just need to file their taxes and apply for and receive the EITC. It is important for recipients to keep their address and bank information up to date. Depending on an applicant’s income and family size, they could receive $50-250 per month this year, with that amount set to increase in the coming years to as much as $500 per month.

Background:

First-Ever Monthly Basic Income: the program creates a monthly stipend for families who benefit from the Earned Income Tax Credit, beginning in 2023, that builds off of DC’s existing EITC local match. That’s a lot of jargon, but at full implementation, for most of those who qualify, it would mean extra cash each month for the nearly 35,000 Washingtonian households who can benefit from the EITC.

The EITC helps households earning up to $57,414 for a family of three annually. In DC, the median household income for Black residents is $46,201 and $83,170 for Latino families, but $143,150 for white households. A monthly basic income is a great way to work toward racial equity by supporting households who both could use the funding most and have historically faced systemic racism and exclusion from government benefits. Learn more here about the District’s local match: https://ora-cfo.dc.gov/blog/brief-overview-dc-eitc

Residents can claim this credit when they file their taxes. But we are also creating a first-in-the-nation program to provide the credit as a monthly payment throughout the year. Just as many of us pay our taxes a little every paycheck, we’ll allow those who qualify to collect a little of the credit they are due during the year. To do this, the Council increased the District’s existing local match of the federal Earned Income Tax Credit (EITC) and converted it from an annual payment to a monthly one for households already receiving the EITC annually.

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