Hawaii’s low-income and working-class families are still struggling to afford the cost of basic necessities like rent, groceries and transportation. This year, state lawmakers have the opportunity to reduce the tax burden for the workers who need it the most — giving them a much-needed lifeline amid rising costs and the continuing pandemic.

Jan. 28 is national Earned Income Tax Credit Awareness Day, and a good time to reflect on how the state can boost tax refunds for workers with the lowest incomes.

Legislators should make the state tax refund for working families with low incomes permanent, and expand it so that those earning the lowest wages can access its full value. This would be a great first step toward reducing the tax burden on hardworking families. Smart policy choices like this would prioritize resources for families with low incomes to help them — and our economy — move beyond this pandemic.

Making this change to our tax code is more important now than ever. Hawaii’s cost of living is the highest in the nation and it has only increased due to economic fallout from the pandemic. Despite rising costs for working families, wages haven’t kept pace with Hawaii’s soaring costs for housing, food, transportation and health care.

Hawaii first introduced its tax refund for working families — known as the Earned Income Tax Credit or EITC — in 2017. However, it is scheduled to expire at the end of 2022, and the current structure of the credit leaves households with the lowest incomes — those earning below $15,000 — unable to take full advantage of it despite having the greatest need.

It’s a matter of basic fairness. Hawaii’s lowest-income earners pay an average of 15% of their incomes in state and local taxes — an effective tax rate two-thirds higher than close to double what the richest 1% of Hawaii residents pay.

Consequently, the tax code also disadvantages Native Hawaiian and Pacific Islander residents, who face barriers to high wage jobs as a result of the ongoing impacts of colonialism. For many people of color and residents with low incomes in Hawaii, these pre-pandemic economic and tax inequities have only deepened after two long years of the COVID-19 pandemic.

The expansion of this important tax credit will not only increase tax fairness, it will also have a tangible economic impact on families and their communities. For every dollar returned via tax refund as part of an EITC, up to $1.24 is spent in the local economy.

The EITC is a proven tax and economic policy that has helped working families make ends meet while also strengthening their communities and local economies. Federal and state versions of the credit have existed for decades and are available in 30 states (plus D.C. and Puerto Rico).

Of the 32 nonfederal credits, 27 are refundable and — as a result — fully accessible to working families with the lowest incomes. Hawaii is 1 of only 5 states with an EITC that does not make its credit refundable.

Hawaii’s tax credit for working families has already given invaluable financial relief to thousands of households and injected millions of dollars into the local economy.

By ensuring that all working families with low incomes — especially those paid the least — are able to permanently access the full value of this credit, we can ensure that communities across our state are stronger and better prepared for the many challenges that lay ahead in the 21st century.

Nicole Woo is director of research and economic policy at Hawaii Children’s Action Network; Will White is director of the Hawaii Budget & Policy Center.