Periodic Earned Income Tax Credit (EITC) Payment, Financial Stress and Wellbeing: A Longitudinal Study
The Earned Income Tax Credit (EITC) addresses the economic needs of low-income families, but its annual distribution in one lump-sum limits recipients’ ability to handle financial emergencies that arise throughout the year. A new paper in the Journal of Family and Economic Issues examines the relationship between periodic payments of EITC and recipients’ wellbeing. The authors compared the perceived financial stress of recipients receiving a traditional lump-sum payment to a group that received four advanced payments spread throughout the year and found that periodic payment recipients experienced significantly lower levels of perceived financial stress. The study found that “periodic payments may enhance the positive association between the EITC and the financial wellbeing of families.”