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The earned income tax credit, or EITC, is a tax break for low- to moderate-income staff, which will increase primarily based on household measurement.
It is a totally refundable credit score, which implies sure filers can obtain the total quantity, even with zero taxes owed. For tax 12 months 2025, the utmost credit score is worth up to $8,046 for filers with three or extra qualifying kids.
Nonetheless, about 1 in 5 eligible taxpayers don’t claim this “valuable” credit, the IRS stated in a January information launch.
For 2024 returns, roughly 23.5 million filers collectively obtained about $68.5 billion from the EITC, and the typical quantity was $2,916, in accordance with the IRS.
EITC “eligibility necessities are advanced,” nationwide taxpayer advocate Erin Collins wrote in her 2026 legislative recommendations to Congress.
“Consequently, thousands and thousands of eligible taxpayers fail to assert the EITC, whereas different taxpayers declare quantities for which they don’t seem to be eligible,” she wrote.
EITC eligibility is predicated in your earnings, tax submitting standing and variety of qualifying kids, if any. The adjusted gross income limits rise primarily based in your submitting standing and qualifying children.
For 2025, single filers with no kids could make as much as $19,104, whereas the identical filers might earn as much as $61,555 with three or extra qualifying kids. The AGI limits are increased for married {couples} submitting collectively, starting from $26,214 for no youngsters to $68,675 with three or extra kids.
How the EITC impacts tax refunds
Since many decrease earners do not incur federal earnings tax, they do not profit from nonrefundable credit, which filers subtract from taxes owed, consultants say.
However the “EITC gives them with this tax credit score within the type of a refund,” Kris Cox, director of federal tax coverage with the Heart on Price range and Coverage Priorities’ federal fiscal coverage division, advised CNBC.
By regulation, the IRS should maintain refunds claiming the EITC or the refundable a part of the child tax credit, often called the extra baby tax credit score or ACTC, till Feb. 15.
Up to now, the company’s filing season statistics releases, together with the average refund amount, have not but included thousands and thousands of funds with the EITC or ACTC.
The primary IRS launch to incorporate these funds will probably be on Friday, and may embody information by means of Feb. 20. Consequently, the typical refund measurement reported on Feb. 27 is “expected to be higher,” in accordance with the IRS.
How Trump’s ‘large lovely invoice’ impacted the EITC
Usually, the EITC adjusts yearly through the IRS’ annual inflation updates. However modifications weren’t made through Trump’s “large lovely invoice,” in accordance with Cox from the Heart on Price range and Coverage Priorities.
“There was a giant alternative for the invoice this previous 12 months to actually increase the incomes of individuals with low pay,” she stated. However “these provisions didn’t make it into the invoice.”
The Home-passed model of Trump’s laws included a provision to “keep away from duplicative and different faulty [EITC] claims,” which might have required precertification for qualifying kids. However the measure was blocked by the Senate parliamentarian. If enacted, the supply might have decreased errors, however made the EITC more durable to assert, consultants say.
