Governor signs Earned Income Tax Credit into law
By John McPhaul
Starting next year, thousands of workers on the island will receive the benefit of a tax credit for work, after Gov. Pedro Pierluisi Urrutia on Sunday signed the law that extends the Earned Income Tax Credit (EITC) to Puerto Rico residents.
Pierluisi filed a bill in the Legislature to increase the EITC in Puerto Rico immediately after the federal government extended the funds to the island as part of the American Rescue Act (ARPA).
“More than 500,000 families on the island will be able to benefit from this incentive, which will have the effect of providing relief to the working class,” the governor said. “I reiterate my appreciation to the administration of President Biden and to Congress for expanding this program in Puerto Rico.”
Some $612 million annually in additional funds for the program for the next 10 years will help us do justice to the workforce of our island,” he added. “With this help we are able to equate the state benefit with the federal one for American citizens living in Puerto Rico and it will have a multiplier effect on our economy.
“This tax credit is a proven program that encourages work and encourages our people to enter the workforce and be adequately compensated.”
Treasury Secretary Francisco Parés Alicea expressed satisfaction over the final legislation and said he was honored to be part of a historic moment in which justice will be done to the Puerto Rican working class.
“We affirm our commitment to the governor and to all taxpayers to distribute this $800 million expeditiously each year to the more than 500,000 families that will be able to claim it from the next tax cycle in the Income Tax Return,” Parés Alicea said. “Our work team is extremely pleased with the final bill and the sustained dialogue to achieve this law, which allows us to incentivize active workers while encouraging other citizens to join the workforce.”
The secretary added that the Treasury Department has already sent the draft distribution plan to the Internal Revenue Service for approval, as established by federal law. He noted that any individual who is a resident of Puerto Rico and is 19 years of age or older during the year for which he completes the Income Tax Return, and who generates earned gross income, may request the EITC on the return. He said the credit will be based on income level and dependents. For example, a single taxpayer with three children, with an income level of $21,000 to $40,000, would have a maximum credit of $6,500 per year.
Pierluisi and Resident Commissioner Jenniffer González Colón, took steps in the White House and Congress for Puerto Rico to be included in ARPA and to expand and extend the EITC program in Puerto Rico, as well as the Credit for Dependent Children (CTC).
In addition to the EITC, all custodians of minors may request the CTC during the next tax cycle. This was not the case in the past for island residents, since only those with three or more dependents could apply for the loan. Next year, however, custodians of children under six years of age will be able to receive $3,600 per child, while for children between six and 17 years of age they will receive $3,000. In subsequent years, the benefit returns to $2,000 for minors up to 16 years of age.
“This benefit of the Work Credit, as well as the Dependent Child Credit and the increase in the minimum wage, represent great permanent steps that we are taking in Puerto Rico in favor of the working class,” the governor said. “Now, not only will they be guaranteed a higher minimum wage, but they will also reward work and help families with children to ensure a better quality of life and to help reduce child poverty.”
“The engine of the economy are the thousands of Puerto Ricans who take to the streets every day to work and contribute to their island, and I am sure that all these benefits come to provide relief to their burden,” he added.