This special report of the Voices for Illinois Children argues that a refundable state earned income tax credit (EITC) would foster employment and reduce taxes for low-income Illinois families. The report maintains that many low-income working families and those beginning the transition from welfare to work confront ongoing poverty despite having an income. However, the report argues, the state income tax system places a substantial burden on low- income working families. The report describes the development of the federal EITC and its impact on lifting people out of poverty, discusses the efforts of other states to complement the federal EITC with a state EITC, and presents information on state EITC benefit levels and state income tax burdens by family income levels. Further, the report provides information on the estimated costs of a state EITC and identifies possible approaches to funding a state EITC with existing dollars. The report concludes by asserting that a state EITC is a targeted and cost-effective alternative for enhancing tax equity without requiring a wholesale constitutional change in the tax system or resulting in immense revenue losses, and thereby serves as an income security policy. (KB)