What is the Earned Income Tax Credit (EITC)
The Earned Income Tax Credit (EITC) is a refundable federal tax credit for low- to moderate-income workers that can reduce your tax bill to zero and put money in your pocket — the credit grows with earned income up to a point, then phases out.
The Earned Income Tax Credit (EITC), also called the Earned Income Credit (EIC), is a refundable federal tax credit designed to benefit low- and moderate-income workers, especially those with children. "Refundable" means that if the credit exceeds the amount of tax you owe, the IRS pays you the difference as a cash refund — making it one of the most valuable tax credits available to eligible filers.
The EITC is deliberately structured to reward work: the credit increases as earned income rises (up to a peak), then phases out as income continues to grow. The goal is to incentivize employment while providing meaningful financial support to working families.
2025 EITC Maximum Credits
| Number of Qualifying Children | Maximum Credit (2025) |
|---|---|
| 0 | $649 |
| 1 | $4,328 |
| 2 | $7,152 |
| 3 or more | $8,046 |
Income Limits for 2025
To claim the EITC, your earned income and AGI must both be below the following thresholds:
| Filing Status | 0 Children | 1 Child | 2 Children | 3+ Children |
|---|---|---|---|---|
| Single / Head of Household | $18,591 | $49,084 | $55,768 | $59,899 |
| Married Filing Jointly | $25,511 | $56,004 | $62,688 | $66,819 |
Investment income cannot exceed $11,600 in 2025.
Who Qualifies for the EITC
To be eligible you must:
- Have earned income (wages, salaries, self-employment income) — investment income doesn't count
- Have a valid Social Security number
- Not file as Married Filing Separately (MFS) or be claimed as a dependent
- Be a U.S. citizen or resident alien
- Not have excessive investment income
- Be at least 25 years old (for workers with no qualifying children) and under 65
Qualifying child requirements (if claiming with children):
- The child must be under age 19 (or 24 if a full-time student), or permanently disabled at any age
- They must live with you in the U.S. for more than half the year
- They must be your child, stepchild, adopted child, sibling, or grandchild
Self-Employed Filers and the EITC
Self-employed workers can claim the EITC based on their net self-employment income (after deducting business expenses and the self-employment tax deduction). Because self-employment income isn't subject to withholding, self-employed filers sometimes under-claim the EITC by not realizing they qualify.
EITC as a Refundable Credit
"Refundable" is key: the EITC doesn't just reduce your taxes to zero — if the credit is larger than your total tax liability, the IRS issues the excess as a refund. A family with three children that qualifies for the maximum $8,046 credit might receive most of that as a cash refund even if they owe little or no federal income tax.
This is different from a nonrefundable credit, which can only reduce your tax to zero (but no further).
Claiming the EITC
Claim the EITC by completing Schedule EIC (if you have qualifying children) and entering the credit amount on Form 1040. The IRS provides an EITC Assistant tool on its website to help determine eligibility.
The IRS is required by law to hold refunds claiming the EITC (or the Additional Child Tax Credit) until mid-February, so EITC filers should expect their refund slightly later than other filers.