No change in substance use disorders or overdose after implementation of state Earned Income Tax Credit (EITC)

Inadequate income is associated with higher likelihood of experiencing a substance use disorder (SUD). This study tests whether the earned income tax credit (EITC), which issues supplemental income for workers with children in the U.S., is associated with lower rates of SUD and fatal overdose.

We examined the effects of state-level refundable EITC presence and generosity (i.e., state EITC rate as a % of federal rate) on SUD-related outcomes (SUD prevalence and intentional and unintentional fatal overdose) using a difference-in-difference methodology, with both two-way fixed-effects models and event study plots. Several sensitivity analyses were conducted to assess the robustness of findings. Five data sources were used to create a combined state-level longitudinal dataset.

We did not find significant effects of refundable EITC presence or generosity on unintentional or intentional fatal overdose or SUD prevalence in two-way models. Event study models detected a very slight upward shift in SUD prevalence following refundable EITC implementation (not seen in sensitivity analyses) and no significant effects of EITC implementation on any of the fatal overdose outcomes.

Evidence regarding income support programs is being highly sought by policy makers as income support programs have become increasingly popular policy levers since the start of the COVID-19 pandemic. Our study indicates EITC policies likely have no impact on SUD or overdose, however, other income support programs without family restrictions are important to investigate further.