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The earned revenue tax credit score, or EITC, is a tax break for low- to moderate-income staff, which will increase based mostly on household dimension.
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 value as much as $8,046 for filers with three or extra qualifying kids.
Nonetheless, about 1 in 5 eligible taxpayers do not declare this “invaluable” credit score, the IRS mentioned in a January information launch.
For 2024 returns, roughly 23.5 million filers collectively acquired about $68.5 billion from the EITC, and the common quantity was $2,916, based on the IRS.
EITC “eligibility necessities are advanced,” nationwide taxpayer advocate Erin Collins wrote in her 2026 legislative suggestions to Congress.
“Consequently, tens of millions 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 relies in your earnings, tax submitting standing and variety of qualifying kids, if any. The adjusted gross revenue limits rise based mostly in your submitting standing and qualifying kids.
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 children to $68,675 with three or extra kids.
How the EITC impacts tax refunds
Since many decrease earners do not incur federal revenue tax, they do not profit from nonrefundable credit, which filers subtract from taxes owed, consultants say.
However the “EITC offers them with this tax credit score within the type of a refund,” Kris Cox, director of federal tax coverage with the Middle on Funds and Coverage Priorities’ federal fiscal coverage division, instructed CNBC.
By regulation, the IRS should maintain refunds claiming the EITC or the refundable a part of the baby tax credit score, often known as the extra baby tax credit score or ACTC, till Feb. 15.
To date, the company’s submitting season statistics releases, together with the common refund quantity, have not but included tens of millions of funds with the EITC or ACTC.
The primary IRS launch to incorporate these funds will likely be on Friday, and may embody knowledge by means of Feb. 20. Consequently, the common refund dimension reported on Feb. 27 is “anticipated to be increased,” based on the IRS.
How Trump’s ‘massive lovely invoice’ impacted the EITC
Usually, the EITC adjusts yearly through the IRS’ annual inflation updates. However modifications weren’t made through Trump’s “massive lovely invoice,” based on Cox from the Middle on Funds and Coverage Priorities.
“There was a giant alternative for the invoice this previous 12 months to essentially increase the incomes of individuals with low pay,” she mentioned. 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 misguided [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 lowered errors, however made the EITC tougher to assert, consultants say.
