Don't Miss Out! Visit our Events page now and reserve your spot at an upcoming SHARE event. Find out what CommUnity can do for you!

Tax Truths

Uplifting the experiences of Low-to-Moderate Income (LMI) workers & families navigating our complex tax system

Tax Truths

What would it look like if we put a human face on our tax code?

To foster an equitable economy our tax code must be people-centered.

In order to create a tax system that works for everyone, we need to understand the challenges, goals, and lived experiences of the low-to-moderate income (LMI) workers and families who often rely on tax credits and refunds to pay for essentials like groceries, rent, and transportation.

This is why we’ve launched Tax Truths – a research initiative to advance a more equitable tax system by:

  • Exposing how the tax system actually functions in low-income communities;
  • Understanding how race and gender impact tax outcomes and financial security; 
  • Identifying how financial coaching can accelerate equitable tax outcomes; and
  • Exploring how financial technology can aid the tax filing process.

Stay up-to-date on our Latest Research

One year in

Over the last year, we’ve launched widespread surveys to LMI tax filers and financial coaches and conducted an environmental scan of tax-focused fintechs, including:

  • Surveyed approximately 200,000 filers across the U.S. who have used MyFreeTaxes, an online portal to self-file their tax returns for free.
  • Analyzed financial and tax data (anonymized) via Change Machine’s financial coaching platform.
  • Surveyed financial coaches and VITA providers who work with more than 14,000 LMI tax filers each year.
  • Conducted an environmental scan of over 400 fintech products to assess for tax relevancy and inclusive and equitable products.

Early Insights

Tax complexity leads to inequity.

The intricacies of the tax system act as barriers to eligible tax filers from successfully navigating the system, causing too many LMI, particularly Black and Brown women, to miss out on critical tax benefits and further exacerbating the racial and gender wealth gap. Our research shows that LMI tax filers report not filing taxes and/or claiming tax credits due to confusion of eligibility, fear of audits and immigration status, and prior negative filing experiences when household changes led to reduced refunds unexpectedly.

Tax credits are critical financial security safeguards.

Tax credits like the Children’s Tax Credit (CTC) and Earned Income Tax Credit (EITC) are some of our most effective tools for reducing poverty and lifting children above the poverty line. Our research shows that Low-to-Moderate Income (LMI) workers and families who receive a refund use it wisely – to prioritize basic living expenses, paying down debt, and making large purchases with the yearly infusion of cash, such as a car or appliance. 

Low-income tax filers embrace fintech despite barriers.

In 2024, technology like online banking, payment apps, and e-filing solutions are abundant, but LMI workers and families aren’t often informed about these options or encouraged to use them. Our research shows that greater than 50% of LMI are already using some form of fintech, but in the absence of regulation, they need other trusted sources to help them identify which tools they should use to build financial security and avoid harm. 

What’s Next

In 2024 we will be releasing additional findings, research, and recommendations directly to our community of practice and via national media outlets, think tanks, and other leaders in tax equity and financial security. 

The best way to stay informed about future research is to subscribe here.

Tax Truths is an initiative of Change Machine, a national nonprofit organization that builds financial security for low-income people. Research was conducted in partnership with United Way Worldwide, and support is provided by the Rockefeller Foundation and the Citi Foundation.

What’s Next

In 2024 we will be releasing additional findings, research, and recommendations directly to our community of practice and via national media outlets, think tanks, and other leaders in tax equity and financial security. 

The best way to stay informed about future research is to subscribe here.

Tax Truths is an initiative of Change Machine, a national nonprofit organization that builds financial security for low-income people. Research was conducted in partnership with United Way Worldwide, and support is provided by the Rockefeller Foundation and the Citi Foundation.