State of Illinois Department of Revenue and Department of Human Services

August 2024 - January 2025

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.

In Illinois, the state EITC can help families receive up to 20% of their federal credit, helping families to not only reduce the dollar amount they’re liable to pay back in taxes, but also get a refund if the credit is greater than the amount they owe. As an effective anti-poverty measure, the state has been eager to get as many families as are eligible to claim the credit, but doing so often requires families to navigate the often complex and frightening world of federal and state tax legislation.

Implementation Challenge

In Illinois, where the average EITC amount in 2023 was more than $2,500 per return , participation in the program has hovered around 75%, peaking at 81.1% in 2021.

Getting more eligible families participating in the program has been a focus of the state, which has been working with New America Chicago on implementing a pilot program to increase uptake of the state EITC for federal tax filers. By leveraging IRS data, the state began doing outreach to Illinois residents who claimed the federal EITC and who likely qualify for the state credit, but did not file an Illinois income tax return. The pilot successfully aided over 22,000 Illinoisians in accessing the state EITC that they may not have otherwise accessed.

But federal, non-state filers are a smaller subsection of the eligible pool. There are thousands of non-filers — those who do not file state or federal taxes — who are entirely missing out on the EITC program, and cannot be contacted via IRS data.

To access and address this field of non-filers, the New Practice Lab in partnership with New America Chicago has engaged with the state of Illinois to understand the landscape of non-filers in the state, and to come up with creative methodologies for outreach to explain these families’ eligibility.

The goal for the New Practice Lab is to be able to offer Illinois tangible learnings and technical insights that can be used to increase uptake for non-filers of the state EITC.

Our Approach

This project has two parts:

The first part of this project builds on the New Practice Lab’s landscape research, which outlined who non-filers are, and what concerns they have around engaging with the tax system. The New Practice Lab is expanding upon that landscape research with in-depth qualitative research focused on Illinois.

Working with COFI, a local organization on the ground in Illinois, the New Practice Lab is connecting with non-filers to hold virtual interviews in both English and Spanish to understand their mindset about filing, including how they feel about the Department of Revenue, their concerns about information sharing, and why they aren’t filing taxes. In addition to virtual interviews, the Lab hosted in-person workshops with non-filers in Southern Illinois.

The second part of this project will work with multiple government agencies across the state of Illinois, including the Department of Revenue and the Department of Human Services. The goal of this partnership is to identify eligible non-filers who already engage with the Department of Human Services through programs like SNAP and connect them with the Department of Revenue for assistance in claiming tax credits. The theory of this engagement is that once a non-filer has been identified, the Department of Revenue can educate them about the benefits of filing and then pull together all existing data about the individual (such as W-2 forms reported by employers) to make it faster and easier for them to file. This can benefit individuals in a number of ways, ranging from access to credits like the EITC to direct reimbursement for overpayment, such as correcting excess withholdings.

What We Learned

This project is still actively in progress; here’s what we’ve learned so far:

This opportunity is compelling, when framed as a way to secure additional money for their family. Participants responded strongly to messaging highlighting the money they were potentially missing out on and expressed a strong interest in learning more about the program and their eligibility. On the other hand, messaging focused on the tax filing process was less engaging for most and could be irrelevant for families who may not be filing that year. Given that many families may not be aware of available tax credits or their eligibility, we recommend prioritizing messages that emphasize the potential financial benefit for their family.

Participants were less concerned about data sharing than we expected. Once the purpose (using information that someone had already provided the state government to inform them about tax credits they may be eligible for) was communicated, participants across the board expressed comfort with that information being shared between the Department of Human Services and the Department of Revenue. Many participants noted that the specific information that could be shared was relatively basic and generally already known to the state. Participants were, in fact, very interested in the program, noting it would save them time and reduce hassle. Formal terms like “data share” and “opt in” were intimidating and should be substituted with more plain language that describes what’s actually happening.

Even people who haven’t had good experiences with state-provided benefits are still interested in increased connection to benefits. Participants who received benefits from the Illinois Department of Human Services (IDHS), the main entity likely to identify and refer eligible non-filers, described a wide range of experiences working with that department. However, even those who had negative experiences with IDHS were still interested in testing out a system where IDHS shares their information with the Department of Revenue so that they can claim tax credits.

Next Steps

This project is running in tandem with the New Practice Lab’s research on non-filers nationally. These two efforts will continue to build off of one another and inform each other’s respective directions as we work to better understand non-filers and how both Federal and state government actors can better reach eligible individuals.