Mapping the landscape of knowledge on barriers to tax filing and credit claiming
National
September 2024 - April 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 support these families, 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.
Our Approach
In order to improve benefits delivery of the CTC and EITC, we have to understand the full scope of those not accessing the benefit — which is largely lower income families that are not filing taxes. Improving cash benefit delivery for these individuals and families is critical, but reaching them is difficult and there are likely many reasons why they have not filed.
To build a more comprehensive view of non-filers the New Practice Lab engaged in a series of listening activities, which combined a national 5,000+ person survey along with a qualitative study with 25 low-income residents across Illinois.
Our goal was to understand why so many low-income households struggle to claim tax credits and receive the support they’re owed, using insights from the Illinois study to help inform and shape survey questions.
Our Approach
Landscape analysis of tax credit uptake amongst low-income filers
A literature review of what’s known about families who do not file taxes or infrequently file taxes
Our Insights
Families who don’t meet the legal minimum required to file taxes in many cases aren’t, and as a result, are leaving a significant amount of money they’re eligible for on the table
For those who access them, tax credits are an essential part of their family’s financial well-being
While there are existing studies on the demographic characteristics of non-filers, less is known about the specific barriers they face in accessing credits
Our Approach
Qualitative study with low-income residents in Illinois
In-person interviews, group discussions, workshops, and messaging surveys with 25 low-income residents in the Chicago area to understand the specific barriers they face in filing taxes
Our Insights
Seven key behavioral archetypes emerged amongst tax filers that represent distinct mindsets and patterns around tax behavior
“One-size-fits-all” language is not a powerful enough motivator to convince families to file; targeted language that addresses the different archetypes can be more effective in urging families to file
Our Approach
National survey of low-income households
5,012 U.S. adults surveyed online in English and Spanish, with an oversampling of low-income households who either filed taxes inconsistently or not at all in the past three years
Our Insights
There are six primary drivers that keep people from filing, which include awareness gaps, differing information streams, fear, complexity, documentation requirements, and seeming disconnect between tax credits and other government services.
36% of those making less than $10,000 a year were unaware of any tax credits, more than double the rate among households earning over $150,000 (17 percent)
Of respondents who were afraid of making mistakes, 61 percent had not filed taxes in the past three years
What We Learned
Our findings were released in a report in April of 2025. Between our research efforts, we identified six core reasons why tax credits often fail to reach the people who need them, along with actions governments—particularly state Departments of Revenue (DORs)—can take to address some of these barriers.
These reasons include:
Awareness gaps were a major barrier to tax credit access for the families who need them most. Among households earning under $10,000 annually, 36% were unaware of any tax credits, more than double the rate among households earning over $150,000 (17%).
Misunderstanding eligibility also kept many from filing. One-third of lower-income households earning under $26,000 who hadn’t filed taxes in the past three years said they didn’t file because they (correctly) believed their income was too low to be legally required. Yet within this group, 20% had earned income and 37% had children—factors that likely would have made them eligible for tax credits, had they filed.
Fear of making a mistake and being penalized for it was the most common barrier to filing, especially among lower-income households. This fear had real consequences: 61% of respondents who felt this way hadn’t filed taxes in the past three years, and even when they did file, they were more likely to miss out on tax credits.
Filing can be costly for families, forcing them to forgo other expenses in order to file. Despite 36% of survey respondents identifying cost as a barrier, most had used professional tax help at some point due to concerns around navigating the process alone.
Accessing the right documents presents a challenge. Half of respondents said they had trouble gathering the documents needed to file. 80% of those who faced documentation issues struggled with more than one type of document.
Most low-income households are already connected with other government support services, but tax credits feel separate and disconnected. 84% of households who had not filed taxes at all or irregularly in the past three years had participated in at least one other public support service during that time period.
Next Steps
The Lab has taken these insights to our state partners, and begun sprint projects that aim to address these filer concerns as states address tax credit uptake gaps. Our sprints in Colorado as well as our convening of state tax administrators have aimed to share and elevate these findings with those that have the most power to effect change.
Read More
Full Report: Designed for Filing, Not for Families: Reimagining Tax Credit Delivery
Collection of Tax implementation insights: Tax Credit Access Collections
