May 20, 2010
Tax Foundation Analysis of IRS Data Shows Average Savings Ranged from $342 in Utah to $104 in D.C.; Factors Such as Marriage Rates, Income Explain Differences in Average Credit
Washington, DC, May 20, 2010 -- Tax filers in Utah saw the biggest average tax savings in 2008 by claiming the child tax credit, followed by those in Idaho, Wyoming, Alaska and Nebraska, according to a Tax Foundation report based on new IRS data.
By contrast, tax filers in D.C., Florida, New York, Massachusetts and New Jersey had the lowest average tax savings from the child tax credit, which allows taxpayers to claim a $1,000 credit for each dependent child under 17.
"The savings vary so much for two main reasons: Families in some states just tend to have more children, such as in Utah," said Tax Foundation Senior Economist Gerald Prante, Ph.D., who authored the report. "States with high rates of single households and fewer children, such as D.C. and New York, saw lower savings. Secondly, the child tax credit begins to phase out for families making over $110,000, so high-income states, such as those in the Northeast, have fewer eligible families claiming the credit."
Tax Foundation Fiscal Fact, No. 228, "Tax Savings from Child Tax Credit Vary Significantly from State to State," is available online at http://www.taxfoundation.org/publications/show/26327.html.
The average tax return in Utah saved $342 in 2008 by claiming the child tax credit, followed by Idaho ($265), Wyoming ($262), Alaska ($261), Nebraska ($258), Iowa ($254), Kansas ($253), Indiana ($245), Texas ($244) and South Dakota ($239). The average tax return saved the least in D.C. ($104) followed by Florida ($167), New York ($173), Massachusetts ($189), New Jersey ($192), Rhode Island ($193), Vermont ($194), Connecticut ($197), Maine ($198), Oregon ($199) and Maryland ($199).
Utah also saw the highest percentage of tax returns, 23.7 percent, claiming the child tax credit, followed by Mississippi (20.8%), Texas (20.7%), Idaho (20.2%), Alaska (20.1%), Louisiana (19.7%), Nevada (19.7%), Arizona (19.7%), Oklahoma (19.4%) and Alabama (19.3%). States with the lowest percentage of tax filers claiming the credit (in addition to D.C., 10.7%) include New York (14.7%), Massachusetts (14.9%), Vermont (15.1%), Florida (15.2%), Montana (15.4%), Maine (15.7%), Connecticut (15.8%), Rhode Island (15.9%), New Jersey (16.1%) and Oregon (16.1%).
Among tax filers who claimed the credit, those in Utah also had the highest average savings of $1,445, followed by Wyoming ($1,407), North Dakota ($1,395), Nebraska ($1,370), Iowa ($1,370), South Dakota ($1,370), Minnesota ($1,354), Wisconsin ($1,335), Kansas ($1,318) and New Hampshire ($1,316). States with the lowest average savings among tax filers who claimed the credit (in addition to D.C., $973) include Mississippi ($1,074), Florida ($1,097), South Carolina ($1,105), Georgia ($1,111), North Carolina ($1,133), Alabama ($1,134), California ($1,147), Louisiana ($1,147), Arkansas ($1,149) and Tennessee ($1,159).
Prante noted that the numbers don't include the additional, or refundable, child tax credit, which explains why the average savings for tax filers claiming the child tax credit is lowest among low-income states such as Mississippi, where many tax filers claim the additional child tax credit.
The Tax Foundation is a nonpartisan, nonprofit organization that has monitored fiscal policy at the federal, state and local levels since 1937.
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