Image: Farm Economy

Federal Tax Policy and Rural Households

Over the past two decades, the Federal tax code has increasingly been used as a tool for achieving various social and other policy objectives such as income support for low-income households. The primary method for providing such support has been the expanded use of tax credits, especially refundable tax credits such as the earned income and child tax credits. As a result of this expanded use, these credits have grown in importance relative to Federal outlays for tradition income support programs. Also, since rural taxpayers have historically had lower incomes and higher poverty rates than urban household a larger share of rural taxpayers benefit from Federal tax policies aimed at lower-income taxpayers. The earned income and child tax credits have provided a substantial boost in income to low- and middle income rural taxpayers and have reduced the rural poverty rate. See Federal Tax Policies and Low-Income Rural Households, EIB-76, May 2011.

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Last updated: Tuesday, November 12, 2013

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