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The Tax Truths report combines survey data with qualitative interviews to uncover the true impact of tax policy on LMI households. In addition to quantitative insights, the report shares quotes and lived experiences from dozens of interviewees, samples of which you can view here. Some of the report’s key findings include:
1. Tax refunds build financial security: For many households, their tax refund can be the largest one-time payment of funds they receive all year. Up to 70% of filers we surveyed see their refund as additive to their financial stability. Interviewees revealed that refunds were primarily used for essentials like groceries, rent, debt repayment, or child-related expenses.
2. Tax code complexity exacerbates inequity: The unpredictable nature of tax credits, coupled with the complexities of the tax code, disproportionately harms low-income filers. 38% of survey respondents were unsure if they received the EITC, and 26% of people with children were unsure if they received the CTC.
3. A better filing experience can reduce stress and anxiety around tax time: Most filers we interviewed reported better experiences with free online tools and in-person programs than those who used paid tax software. High-quality, accessible filing experiences also reduced mistakes: When Direct File began importing the previous year’s Adjusted Gross Income into the 2023 forms, they saw a 25% decrease in rejected returns and 86% of users surveyed by the IRS said that using Direct File increased their trust in the government.
“Tax time is not just about paperwork and numbers—it’s a critical moment that directly affects the financial security of millions of Americans,” said Mae Watson Grote, Founder and CEO of Change Machine. “The findings in Tax Truths underscore the urgent need for a tax system that is fairer, simpler, and more transparent, particularly for those who are already facing financial insecurity.”
Based on these findings, the report offers specific recommendations for policymakers, the IRS, and financial coaches.
Key among them is simplifying the tax filing process by expanding the IRS Direct File program and pre-populating tax data, such as W-2 and 1099 forms, to reduce errors and improve accuracy.
Additionally, the report highlights the importance of maintaining a well-funded IRS and expanding access to tax credits, especially by simplifying eligibility for the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), ensuring more families can benefit from these financial lifelines.
The full Tax Truths report is available via Change Machine’s website to download for free, with additional short-form resources and tax filer stories available at taxtruths.org. Change Machine views these stories and other insights from their Tax Truths work as shared resources and encourages any organization advocating for tax equity to download and use them in their communications.
Arden Evenson
Change Machine
(347) 391-6073
email us here
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