What is the Earned Income Tax Credit?

A federal and state anti-poverty program that offsets and, in some cases, refunds taxes paid by low-wage workers.

Under the federal program, the Internal Revenue Service refunds some payroll and income taxes paid by those earning below a certain threshold. Earned income includes things like wages and tips, but not Social Security or unemployment benefits.

Congress created the Earned Income Tax Credit in 1975, expanding it significantly in the 1980s and '90s. As of 2007, 20 states — including New York, Virginia and Illinois — as well as the District of Columbia had a similar program.

In recent years, advocacy groups called for an Earned Income Tax Credit in North Carolina. Legislators created the state program as part of the 2007 budget.