Kentucky, Indiana and 13 Other States Are Taxing the Working Poor Families Deeper in Poverty

Findings of the Center on Budget and Policy Priorities

Sixteen states taxed working-poor families deeper into poverty last year, according to a new report from the Center on Budget and Policy Priorities. Income tax bills on poor families in those 16 states ranged from a few dollars to several hundred dollars, which is a significant amount for a family struggling to make ends meet, the report said.

Among the report’s findings:

Sixteen states, out of the 42 with an income tax, taxed working-poor, married couples with two children in 2008: Alabama, Arkansas, Georgia, Hawaii, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, Montana, North Carolina, Ohio, Oregon and West Virginia

The number of states taxing extremely poor families of four – those with incomes below three-quarters of the poverty line ($16,513) – decreased from nine in 2007 to six in 2008. Three states that previously taxed such families began exempting them: Hawaii, Michigan, and West Virginia. States still taxing extremely poor families are: Alabama, Georgia, Illinois, Indiana, Montana, and Ohio.