Tax Credits

The U.S. tax code contains many preferences, such as tax credits, that lower the amount of taxes owed. Some of those tax credits are “refundable,” which means that people can receive payments from the government if the amount of their credit exceeds their other tax liabilities. CBO analyzes the effects on the economy and the federal budget of existing tax credits and possible changes to tax credits.

  • Report
    Effective Marginal Tax Rates for Low- and Moderate-Income Workers in 2016

    In 2016, low- and moderate-income workers will face an effective marginal tax rate of 31 percent, on average. Federal individual income and payroll taxes will be the main contributors.

  • Report
    Growth in Means-Tested Programs and Tax Credits for Low-Income Households

    During the past 40 years, federal spending for major means-tested programs and tax credits for low-income households more than tripled as a share of gross domestic product. In 2012, such spending totaled $588 billion.

  • Report
    Refundable Tax Credits

    The number and cost of refundable tax credits have grown considerably since 1975. Federal costs (in 2013 dollars) peaked at $238 billion in 2008, but costs will fall to $149 billion in 2013 before reaching $213 billion in 2021.