The American Rescue Plan enhanced the earned income tax credit for 2021, making it available for the first time to some young adults.
Previously, only workers with children were able to claim the credit, which left out some of the workers with the lowest incomes as well as non-custodial parents, meaning those who do have children who don't live with them for most of the time.
These changes mean that about 5 million young workers would regain access to the federal credit and receive an additional $4 billion in benefits in 2022. Overall, the change would help about 17 million Americans, according to a separate study from the Center on Budget and Policy Priorities. "It's super-targeted to low-income folks and it impacts a really diverse group of filers," said Davis. The group that is newly eligible is also largely new in the workforce and just getting a foothold, she added. An additional $800 in a tax refund can help them pursue higher education or cover necessary costs.
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