Leaving Money on the Table: Nudging Taxpayers to Claim a Refundable State Income Tax Credit

John D. Stavick and HoaPhu Tran

Public Finance Review, 2025, vol. 53, issue 4, 415-439

Abstract: In 2020, Nebraska sought to provide property tax relief through an income tax credit against public school property tax levies. Millions of dollars of the tax credit were offered and went unclaimed. The state responded by mailing notifications to 6,000 taxpayers that informed them of the opportunity to claim the missed credit using a simplified form. Treatment effects estimated using taxpayer microdata show that the credit take-up rate of notified taxpayers was 20 percentage points greater than that of 9,905 taxpayers selected for potential notification but received no contact. Taxpayer subgroups, such as self-preparers, married taxpayers that filed jointly, and rural taxpayers were among those most responsive to notification.

Keywords: property tax; income tax; state tax administration; taxpayer behavior (search for similar items in EconPapers)
JEL-codes: C93 H24 H71 H77 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:53:y:2025:i:4:p:415-439

DOI: 10.1177/10911421251327176

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