Earned Income Tax Credit (EITC)

How It Works

The Earned Income Tax Credit is one of the most significant anti-poverty programs in the U.S. tax code, providing a refundable credit that can result in a tax refund even if you owe no federal income tax. The credit amount depends on earned income, filing status, and number of qualifying children. For 2025, maximum credits are approximately $632 with no children, $4,213 with one child, $6,960 with two children, and $7,830 with three or more children. Income limits vary by filing status and family size — for example, a married couple with three children can earn up to about $66,819 and still receive a partial credit. The credit phases in as income rises from zero, reaches a maximum at a plateau, then phases out gradually. This structure creates an incentive to work while providing the largest benefit to families with moderate earned income. The credit is fully refundable, meaning families with no tax liability receive the full credit as a cash payment. To claim the EITC, you must have earned income (wages, salaries, or self-employment income), meet income limits, and have a valid Social Security number. Investment income must be below $11,600. The IRS estimates that about 20% of eligible taxpayers fail to claim the EITC each year, leaving billions in unclaimed credits. Common reasons include not knowing the credit exists, having income that fluctuates year to year, or being confused by the qualifying rules. Free tax preparation services like VITA specifically help low-income taxpayers claim this credit.