When Evanston parent Chanelle Brown had her second child last year, it felt like the price of everything went up — child care, education and extracurricular activities — and being frugal with each paycheck didn’t help.

“Child care is very expensive. It’s the cost of our rent,” Brown said. “Diapers are more expensive than they’ve ever been. Formula, food in general, is more expensive, and even if you get assistance with those things, everything has gone up. We’re cutting back even more, but I still want my children to have a good quality of life.”

It’s why she’s looking forward to tax changes this season that will put more money back in parents’ wallets — something she lobbied for last summer in Springfield with the Community Organizing and Family Issues group, a South Loop-based organization. Brown trekked around the state Capitol building, with her 12-year-old daughter, telling legislators why Illinois parents need extra financial help.

“If you have more money in your pocket, then your children can do extracurriculars,” she said. “More money means getting your time back and also paying for things that are more expensive now.”

Chanelle Brown holds her son, Kendrick Williams.

Illinois expanded its earned income tax credit in 2024, giving low- to moderate-income workers a bigger break on their 2023 state income tax filing. But many taxpayers who receive the federal EITC are unaware that the state program exists. Workers who qualify for the federal EITC generally qualify for the Illinois EITC, since the requirements are similar.

And some of those filers could see an increase this tax season by also taking advantage of the state’s first-ever Child Tax Credit, which offers relief to parents struggling with rising living costs. Parents with children under 12 who qualify for the Illinois EITC are eligible to claim the CTC.

“When you’re choosing between diapers, food on the table, new clothes, or getting your car repaired, those are tough choices. And we’ve got a lot of hard working families that deserve to be invested in,” said Erion Malasi, Illinois policy and advocacy director at the nonprofit Economic Security Project. “Giving families flexible cash means that they can choose what crisis and what issues they need to deal with on their own time.”

The Illinois EITC helps workers with low wages by reducing their taxable income. If the credit reduces their tax burden to less than zero, the extra money is refunded.

Since 2000, Illinois has been matching a certain percentage of the federal EITC. Following a 2022 campaign by the Illinois Cost-of-Living Refund Coalition, made up of unions, community groups and nonprofits, the state expanded the credit from an 18% match of the federal program to a 20% match. This increased the amount of money refunded to low- and middle-income families for the 2023 tax year.

“The power of the EITC is it gives more cash back to parents than what they owe the state. So you’re always going to get the full benefit regardless of your income or tax situation, if you’re eligible,” Malasi said.

Before the expansion for the 2023 tax year, the state income credit left out younger workers, older workers and people filing with an IRS-issued Individual Taxpayer Identification Number, often used by international workers or undocumented immigrants.

“These were people who were really getting ripped off by the system because they were actually paying taxes, and they were not getting the same tax credit that other people got simply by virtue of being documented,” Shriver Center on Poverty Law Director of Economic Justice Jeremy Rosen said.

“Many people who are undocumented and working are actually paying taxes, and they often aren’t seeing the benefit of [getting] their tax payments back the way other families would be,” Rosen said.

Now, the state EITC covers filers 18 to 24 and 65 or older, as well as those who file with an ITIN instead of a Social Security number — groups not generally covered under the federal EITC.

This year, the maximum amount that can be claimed under the Illinois EITC is between $126 and $1,566, depending on the number of qualifying children filers claim. It’s a slight bump from the 2023 tax year, when filers could receive $120 to $1,486.

Illinois Department of Revenue spokesperson Maura Kownacki said 169,471 Illinois taxpayers received the credit last year, with the state paying more than $30 million.

Child tax credit is extra money for parents

Under the CTC, parents with children under 12 will also be eligible for a 20% match of the state EITC. Last summer, the Illinois Legislature passed the state’s first-ever CTC, setting aside $150 million for the program over the next two years. After 2026, $100 million will be permanently available to eligible families.

Sponsored by state Sen. Omar Aquino, D-Chicago, Rep. Marcus Evans Jr. and many others, the CTC was signed into law by Gov. JB Pritzker in May 2024. Illinois became the 15th state to implement a state-level version, partially inspired by the success of the federal CTC expansion that took place during the pandemic.

Amid rising living costs and the pandemic, the federal government in 2021 expanded its CTC from $2,000 a child to $3,600 for children under 6 and $3,000 for children 6 to 17. Along with the three rounds of pandemic stimulus payments, the expanded tax credits helped cut child poverty in half in 2021, according to the U.S. Census Bureau.

While Congress let the expanded credits expire in 2021, its success spurred many states to implement a version of their own, Malasi said.

For the CTC, filers this spring will receive a 20% match of what they receive from the state EITC, capping out at $300. In 2026, the match will double to 40% and be available to families permanently.

“This was something that Illinois lawmakers could do to try to put money back in families’ pockets and stimulate the economy at a time when it was really needed,” Aimee Galvin, government affairs director for Stand with Children Illinois, said.

“Federal data shows that 80% of the CTC is spent immediately and locally to buy goods and services, which is why we say this is good not just for families but also localities — on groceries and within people’s neighborhood and local businesses.”

However, people who don’t earn an income, such as those who are full-time caregivers or rely on disability benefits, won’t receive the credit.

“If you’re a caregiver 100% of the time and you’re not generating an income, you will not be able to get this benefit. It’s one of the limitations,” Galvin said.

Taxpayers eligible for the federal EITC automatically qualify for the state program and, by extension, the state’s new CTC if they have children under 12. But many Illinois households eligible for the benefits don’t claim it on their taxes.

About 8,274 Illinois taxpayers claimed the EITC on their 2022 federal tax returns but didn’t take advantage of the state EITC, according to the latest figure from the Illinois Department of Revenue. That meant an estimated $4.15 million went unclaimed by Illinois taxpayers who would have qualified, Kownacki said.

Some low-income families who aren’t required to file their taxes may also be unaware that they would receive money from the credit, Malasi said.

“About 1 in 5 households who are eligible for the EITC don’t end up claiming that tax credit, partly because tax preparation software charges extra fees to claim state tax credits or because they aren’t aware that this credit is made available to them,” Malasi said.

With the new CTC, advocates are working to raise awareness and ensure families receive the maximum tax credits they’re eligible for.

“This will create more stability for families, so they’ll have more money for groceries, health care, housing and critical essentials,” Galvin said. “This is part of a growing trend of eradicating poverty, and it really does come down to putting more money into people’s pockets.”

Do I qualify for the Illinois Earned Income Tax Credit?