Mapping the landscape of knowledge on barriers to tax filing and credit claiming
Why this matters for families
Across the country, millions of families are living paycheck to paycheck, struggling to afford their basics on low to moderate incomes. To help these families, over 31 states and the federal government have instituted the Earned Income Tax Credit (EITC), which can provide families with thousands of dollars after filing their federal and state taxes. Tax credits have become a critical anti-poverty program in the United States, providing an essential source of cash for many American workers and families.
The 2021 expansion of the Child Tax Credit (CTC) in the American Rescue Plan reduced child poverty in the United States by 40% that year. However, accessing credits like the CTC is notoriously difficult as they are claimed during annual tax filing. The bipartisan, highly successful EITC reaches only 80% of eligible households nationwide, with lower-income, less-educated households being most likely to leave money on the table compared to other populations. The IRS estimates that roughly 20% of EITC-eligible and CTC-eligible individuals do not receive the credit payments they are owed — the federal EITC alone averaged $2,500 per return in 2022.
Our Approach
In order to improve benefits delivery of the CTC and EITC, we have to understand the full scope of those not accessing the benefit — which is largely lower income families that are not filing taxes. Improving cash benefit delivery for these individuals and families is critical, but reaching them is difficult and there are likely many reasons why they have not filed.
To build a more comprehensive view of non-filers the New Practice Lab engaged in a research project kicked-off in 2024 and continuing into 2025. The first part of this project was an extensive literature review to understand what the broader ecosystem does and does not understand about non-filers. It’s a review that helped to inform the second part of this project, a national survey that aims to better understand non-filers and non tax credit claimants. The final report from that survey is due in early 2025.
What We Learned
Who non-filers are: Non-filers can be classified into three primary archetypes: intentional non-filers (who don’t file because of perceived high costs or concern about paying past taxes), unaware non-filers (those that don’t know about the credits) and misinformed non-filers (who are aware of the credits but don’t think they are eligible or are fearful of applying).
Largely speaking, these non-filers tend to have lower incomes, they’re often people of color, sometimes with foreign-born or mixed immigration status families. They tend to have larger families with three or more children, and are sometimes part of non-traditional families, living in rentals or unstable housing situations. Interestingly, armed forces members are also more likely to be non-filers.
Why non-filers don’t file: In accessing tax credits, non-filers come up against structural, social, and psychological barriers, much of which can be attributed to the intimidating tax system, misinformation, and concern about seeking help.
What can be done to improve the filing process: From previous outreach experimentation, we know that outreach can be key to increasing uptake, but the common low-touch — which includes things like letters and texts — are often ineffective by themselves. Personalized, higher-touch interventions have been more successful; these include things like formal government letters with personalized information and pre-filled forms. Helping government agencies develop procedures for data agreements and processes to improve data usability can improve this more effective targeted outreach.
The biggest barrier for many would-be filers remains the complexity of the filing process, which is why expanding free filing support and simplifying the filing process is so crucial to overcoming these barriers.
Next Steps
Given the outcomes of the research, the New Practice Lab has defined next steps both for further examination and for practical takeaways to guide the New Practice Lab’s implementation work with states like Colorado and Illinois.
In the immediate term, there are implementation solutions that can help eligible non-filers enroll in other benefits programs to improve tax credit uptake, through benefits like SNAP and Medicaid. This integration can also help to ease fears and reduce misconceptions individuals have about the tax credit programs. Improved language that clarifies misconceptions can also reduce self-exclusion.
This research also suggests future areas of examination, which have informed the future survey process to focus on identifying and addressing costs for non-filers across the benefits cycle as well as understanding agency experiences with data efforts and tradeoffs.
