The Earned Income Tax Credit, or EITC, provides tax relief to millions of low- to moderate-income Americans, although the IRS estimates that one in five eligible taxpayers don’t claim it on their tax returns.
Established in 1975, the EITC originally provided a maximum credit amount of just $400. Today, taxpayers can receive a credit of up to $7,830 per year, depending on their income and how many children they have.
“The Earned Income Tax Credit is an economic lifeline for so many. Yet, 7 million eligible low-income taxpayers each year never claim the credit,” said former IRS Commissioner Danny Werfel in 2024.
Werfel believed the IRS could do more to make sure eligible families are aware of the lucrative tax credit, which is part of why he helped push the tax bureau to launch Direct File options for the 2023 tax season. This free service guides taxpayers through the filing service, and in the 2024 tax season expanded to cover 25 states—more than double the original 12.
The former commissioner hoped to see more families take advantage of the EITC as the IRS expands its digital offerings. Eligible households must meet some strict requirements, of course. Let’s take a look at the details to see if you qualify.
The EITC is designed to help low- to moderate-income working individuals and families. It can significantly reduce their tax burden and sometimes helps to provide a refund.
Not everyone qualifies for the EITC, of course. Taxpayers who do qualify must have earned income from employment or self-employment. This income must be below specific thresholds, which change yearly.
Taxpayers must also file a tax return, even if their income is below the filing requirement. They cannot claim the EITC if they are married but file separately. Lastly, taxpayers must be citizens or residents of the United States for at least half the year.
The amount of the EITC varies based on income and the number of qualifying children. It has a maximum credit, which increases with each child, up to a limit. For tax year 2024, the maximum credit amounts and adjusted gross income (AGI) limits are:
The credit begins to phase out as income rises above a certain level. This means fewer benefits are offered for higher earners.
The number of children you have can affect the amount you receive. To qualify, children must meet specific age, relationship, residency, and joint return requirements. Children must be under the age of 19 at the end of the tax year, or under 24 if they are full-time students.
