Part of understanding your responsibilities as an employer is understanding the crucial communications for promoting awareness about the Earned Income Tax Credit (EITC). For eligible employees, the EITC can provide a significant financial boost, and employers play a key role in ensuring this vital information reaches those who qualify. Some states mandate employers to notify employees about the EITC, and compliance with these requirements is essential.

Here, we outline what you need to know as an employer, including state-specific requirements and who should receive notices.

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What Is the EITC?

The Earned Income Tax Credit (EITC) is a refundable tax credit designed to benefit low- to moderate-income workers and families by reducing their tax liability and providing refunds when applicable. The credit amount depends on income, filing status, and the number of qualifying children. For 2025, eligible employees can receive up to $7,430 if they meet the criteria.

Despite its benefits, the IRS estimates that one in five eligible taxpayers fails to claim the EITC. Employers can help bridge this gap by sharing information about the EITC and ensuring compliance with state-specific notification laws.

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States with Employer EITC Notification Requirements

Some states require employers to notify employees about the EITC, typically by distributing notices with annual wage summaries like W-2s and 1099s. Here’s a breakdown of state requirements and which employees should receive notifications:

California

• Who Should Receive Notices: All employees, regardless of income level.
• Timing: Notices must be provided within one week before or after distributing W-2s or 1099s.
• Method: In person, by mail, or electronically.

Illinois

• Who Should Receive Notices: Employees earning under the EITC threshold.
• Timing: Provided alongside W-2s or 1099s.
• Method: Written or electronic notice (IRS Notice 797 recommended).
• Income Thresholds for 2025: Align with federal EITC income limits:
  • Single, Head of Household, or Widowed:
    • No children: $19,104
    • One child: $50,434
    • Two children: $57,310
    • Three or more children: $61,555
  • Married Filing Jointly:
    • No children: $26,214
    • One child: $57,554
    • Two children: $64,430
    • Three or more children: $68,675

Louisiana

• Who Should Receive Notices: New hires earning $47,000 or less annually.
• Timing: Notification required at the time of hire.
• Additional Requirement: Post a state EITC notice in the workplace.

Maine

• Who Should Receive Notices: All employees.
• Timing: Ongoing via a workplace poster in a conspicuous location.

Maryland

• Who Should Receive Notices: Employees potentially eligible for federal or state EITC.
• Timing: Annually, on or before December 31.
• Method: Written or electronic notice.
• Income Thresholds for 2025: Employers should notify employees whose earnings fall below the federal EITC income limits mentioned above.

New Jersey

• Who Should Receive Notices: Employees who may qualify for the federal and/or New Jersey EITC.
• Timing: Annually, between January 1 and February 15.
• Method: Written communication.
• Income Thresholds for 2025: Follow federal EITC income limits.

Oregon

• Who Should Receive Notices: Employers must notify employees about the federal and state EITC.
• Timing: The notice must be provided with the employee’s W-2.
• Method: In English and any language predominantly used by the employer to communicate with the employee.
• Income Thresholds for 2025: Follow federal EITC income limits.

Texas

• Who Should Receive Notices: Employers are required to notify employees about the federal EITC.
• Timing: Annually, on or before March 1.
• Method: Notification can be in person, electronically, through a flyer included with a pay stub, or by first-class mail.
• Income Thresholds for 2025: Use federal EITC income limits to determine which employees should receive notifications.

Virginia

• Who Should Receive Notices: All employees.
• Timing: Ongoing via a workplace poster.
• Additional Requirement: Use notices issued by the Virginia Department of Social Services and IRS.

Philadelphia, Pennsylvania

• Who Should Receive Notices: Employees eligible for the EITC, Child Tax Credit, or Philadelphia Wage Tax Refund Program.
• Timing: Distributed with W-2s.

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Best Practices for Employers

1. Use the IRS EITC Assistant: Direct employees to the IRS EITC Assistant. This online tool helps employees determine their eligibility and estimate their credit amount for 2025, simplifying the process and ensuring they don’t miss out on this valuable benefit.Identify Eligible Employees: Work with your HR team or payroll provider to identify employees who may qualify for the EITC based on income thresholds.
2. Align Notifications with Wage Summaries: Distribute notices alongside W-2s and 1099s to streamline compliance.
3. Leverage Official Resources: Use IRS Notice 797 and state-specific materials to ensure accurate and compliant messaging.
4. Maintain Documentation: Keep records of notifications distributed to demonstrate compliance in case of an audit.
5. Educate Employees: Share information about free tax preparation services, such as Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) programs.
6. Partner with Experts: Navigating state-specific compliance requirements can be complex. Partner with Paradigm Consulting to stay ahead of these regulations and ensure your business is fully compliant.

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In Conclusion

Promoting awareness of the EITC The IRS EITC Assistant is a helpful resource for employees to verify their eligibility and understand their potential credit amount. Sharing this link with your team demonstrates your commitment to their financial well-being. and is a small step that can make a big difference for your employees.

By adhering to state-specific requirements and actively sharing information, you’re not just ensuring compliance—you’re empowering your workforce with valuable financial resources. With EITC Awareness Day approaching, now is the perfect time to review your policies and make a plan to support your team.

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At Paradigm Consulting, we specialize in helping small businesses navigate complex HR and compliance challenges. Let us guide you in creating tailored strategies that keep your business ahead of the curve. Contact us today to learn how we can support your team!