Noting that a key challenge for policymakers and others who are concerned about the well-being of children and families is how to develop and improve policies that reward work and help low-income working families increase their earnings, this research brief examines the current and potential impact of state earned income credits (EICs) as a means of building on the positive effects of the federal EIC at the state level. The brief examines the role that state EIC programs have played in the level of children's economic well-being in the District of Columbia and the 15 states that had such programs in 2000 and analyzes how many children would be raised out of poverty if state EIC programs existed universally. The brief finds that the extent to which a state EIC benefits working poor families is critically dependent upon the size of the credit in terms of its percentage of the federal EIC and whether the credit is refundable or nonrefundable. Some state EIC programs have had substantial impact on the incomes of working poor families. The brief notes that with a 25 percent universal state EIC, over 500,000 children would escape poverty. Nonrefundable credit would benefit very few children compared to a refundable credit. Potential funding mechanisms are suggested, most notably the Temporary Assistance to Needy Families block grants. The brief concludes by noting that state EICs hold considerable promise to improve the lives of working poor parents and their children. (Contains 18 endnotes.) (KB)