The governor will take steps to increase employment credit

Governor Pedro Pierluisi has announced that he will submit a measure by the administration to extend to Puerto Ricans the provisions of the labor credit available in the Federal Internal Revenue Code.

“With this, it will be possible to equate the state benefit with the federal one for American citizens living on the island,” the statement said.

Pierluisi stressed that the measure to increase the Puerto Rican government’s work credit program with federal funds will have the effect of encouraging work and providing assistance to the working class.

The governor reiterated his appreciation to President Biden’s administration and Congress for approving the US Rescue Plan, which expanded the Earned Income Tax Credit (EITC) program by approximately $ 612 million in additional funding for the program for the next 10 years.

“The full expansion of employment credit in Puerto Rico will have a multiplier effect on our island. The approval of this measure will allow our taxpayers to receive an economic incentive that fully aims to promote employment. For this government, it is extremely important to expand resources on available to us and for the benefit of our citizens, ”said the governor, who added that the measure stipulates that the Puerto Rico Treasury Department will take whatever action is necessary to promote the effective implementation of this legislation for the fiscal year 2021 .

The law explains that Puerto Rico’s work credit currently sets a 10-cent tax credit for every dollar of income a family generates, up to $ 15,000, for a family married to two children. However, as a family’s income continues to rise, credit decreases until it is eventually reduced to zero, which occurs when income reaches $ 34,750. According to the existing calculation, the maximum benefit of labor credit in Puerto Rico is $ 2,000 per year, so this measure aims to equate the benefit granted in state labor credit with the federal one.

As a condition of receiving approved federal funding, the Puerto Rican government must make annual payments of more than $ 800 million to EITC beneficiaries. However, for fiscal year 2019, the requested loans were estimated at $ 115 million, with a total of 258,000 applicants, which is well below the established base value. For this reason, it is necessary for the Government of Puerto Rico to approve legislation aimed at amending the local EITC in order to extend employment incentives.

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