Earned Income Tax Credit (EITC).

In plain English

The EITC rewards having earned income (wages, salary, or self-employment income) below an annual limit set by the IRS. The credit phases in as your earnings rise, plateaus at a maximum, then phases out as income climbs past a threshold, so it is largest in the middle of the range rather than at the very bottom. It scales with the number of qualifying children (zero, one, two, or three or more), and workers with no children can claim a smaller version within a narrow age and income band. It is fully refundable: if the credit is larger than the tax you owe, the IRS pays you the difference as a refund. To claim it you need earned income, a valid Social Security number, and investment income under an annual cap, and in most cases you cannot use the Married Filing Separately status. The exact dollar amounts and income limits are reset by the IRS each year for inflation.

01Why it matters

The EITC is one of the largest anti-poverty programs in the country and one of the most under-claimed: the IRS estimates about one in five eligible workers do not claim it each year, often because they earned too little to think filing was worthwhile. You have to file a return to receive it, even when no tax was withheld.

02The math, step by step

A single parent with two children and modest wages files a return, claims the EITC, and receives it as a refund on top of any tax that was withheld, even though their tax bill was already zero. A worker with the same income but no qualifying children receives a much smaller credit.

03What this is NOT

04Receipts

Every figure on this page is sourced to a primary document. Tap to open the original.