Individual Development Accounts (IDAs)

Individual Development Accounts (IDAs) are special savings accounts that encourage lower-income workers to save by matching the funds they deposit. Money saved can be used to purchase a home, pay for higher education or job training, or start a small business. Some programs allow savings to be used for other asset-building purposes, like home repair.


IDA programs typically involve a partnership between nonprofits, banks or credit unions, and government agencies. Financial institutions open the savings accounts for workers and deposit the matching funds.

Most IDA programs require participants to attend financial education classes to learn about money management and asset development. The EITC and CTC are frequently included as a class topic since tax credit refunds provide additional income, making it easier for lower-income workers to make required deposits.


Programs are funded by government agencies, financial institutions, corporations, or private foundations. Federal welfare rules permit states to use TANF funds to support IDAs for cash assistance recipients moving into the labor force. Federal legislation has been proposed to provide a tax credit to encourage financial institutions to participate more widely in IDA programs.


Since IDA programs reach workers who are eligible for the EITC and CTC, outreach campaigns should include IDA partners in campaign planning meetings. Outreach campaigns can encourage organizations that run IDA programs to:

  • Tell workers about the EITC and the CTC during IDA participant recruitment.
  • Discuss the tax credits and free tax help in financial education, homeownership, and business development classes.
  • Insert tax credit information into educational packets and display flyers and posters at resource centers and in training rooms.
  • Schedule a day when IDA participants can file their tax returns onsite for free.
  • Arrange for financial institutions to mail a tax credit envelope stuffer with IDA statements.

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