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The earned income tax credit (EITC) is a refundable tax credit designed to provide relief for low- to moderate-income working people. In 2022, about $64 billion in earned income credits was distributed to 31 million taxpayers, with an average credit of $2,043. If you meet eligibility requirements and qualify for a credit, you may even receive a tax refund. Here's what you need to know.
How Do Earned Income Tax Credits Work?
If you qualify for the EITC, you can apply the credit directly toward your tax bill and collect whatever is leftover in cash. For example, if you owe the federal government $2,300 in taxes and you qualify for an EITC of $3,733, you're owed the leftover—$1,433. Because the EITC is a refundable tax credit, you receive this money as a tax refund.
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Income eligibility for the EITC is based on your adjusted gross income and your earned income. Adjusted gross income is all the money you made in a year minus specific deductions and credits. Earned income includes:
- Wages, salaries and tips
- Pay received for gig work or contracting
- Union strike benefits
- Nontaxable combat pay
- Certain disability benefits received before you reach minimum retirement age
- Net earnings from self-employment
Other types of income are not considered earned. These include:
How Do I Qualify for the Earned Income Credit?
EITC rules vary depending on your filing status and family size. Here are the basics.
For All Taxpayers
- Your earned income and adjusted gross income must be within defined limits (see tables below).
- Your investment income cannot exceed $10,300 for the 2022 tax year or $11,000 in 2023.
- You, your spouse and qualifying children have valid Social Security numbers.
- You were a U.S. citizen or resident alien for the full tax year.
- You have not filed Form 2555 (related to foreign income).
For Single Taxpayers
If you don't have children—or don't have "qualifying children" as described below—you must meet these additional requirements:
- Be older than 25 but younger than 65 at the end of the tax year
- Have lived in the United States for more than half the year
- Not be the dependent or "qualified child" of another taxpayer
Who Is a "Qualifying Child"?
For the purposes of the EITC, your "child" does not have to be your biological child. Rather, they must live with you in the U.S. for more than half the year, and have one of the following qualifying relationships with you:
- Son or daughter
- Stepchild
- Legally adopted child
- Foster child
- Sibling (step, half or whole)
- A descendant of any of the above
Your qualifying child must also be younger than you are and under the age of 19 at the end of the tax year—24 if they are a full-time student. A child who is permanently and totally disabled can be any age.
What Are the EITC Income Limits?
Income limits for EITC eligibility vary depending on your filing status and the number of qualifying children you claim.
| Number of Children Claimed | Single, Head of Household or Widowed | Married Filing Jointly |
|---|---|---|
| Zero | $16,480 | $22,610 |
| 1 | $43,492 | $49,622 |
| 2 | $49,399 | $55,529 |
| 3+ | $53,057 | $59,187 |
Source: IRS
| Number of Children Claimed | Single, Head of Household or Widowed | Married Filing Jointly |
|---|---|---|
| Zero | $17,640 | $24,210 |
| 1 | $46,560 | $53,120 |
| 2 | $52,918 | $59,478 |
| 3+ | $56,838 | $63,698 |
Source: IRS
One important note: If you want to receive the EITC, you must file a tax return—you will not get it otherwise. This is true even if you don't owe any taxes or aren't otherwise required to file a return.
What Is the Maximum EITC Amount I Can Claim?
Again, the size of your tax credit will depend on the size of your family. Here is the maximum EITC you can receive for the 2022 tax year:
- $6,935 with three or more qualifying children
- $6,164 with two qualifying children
- $3,733 with one qualifying child
- $560 with no qualifying children
For 2023, maximum EITC credits increases are as follows:
- $7,430 with three or more qualifying children
- $6,604 with two qualifying children
- $3,995 with one qualifying child
- $600 with no qualifying children
Is the Earned Income Tax Credit Worth It?
If you qualify, the EITC is worth pursuing. Whether it merely reduces your tax bill or secures you a refund, the EITC represents hundreds or thousands of dollars in available relief. Still, the IRS reports that roughly 20% of eligible taxpayers don't claim the EITC.
If you are confused about your eligibility, many online tax programs include EITC calculations to help you puzzle this out. The IRS also offers an online EITC Assistant and live volunteer help through its Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites.
If you claim the EITC, your tax refund may be delayed. The IRS is required to wait until mid-February to begin issuing refunds to taxpayers who claim the EITC.
Are There Other Tax Credits Available?
Many other tax credits are available to both individuals and families. In particular, taxpayers who qualify for the EITC may want to consider the child tax credit (CTC), the additional child tax credit (ACTC) or the credit for other dependents. All three of these credits target families with similar income and qualifying characteristics. The ACTC is also partially refundable, meaning that if you qualify and the refundable portion of your credits exceed your tax bill, you can receive the difference as a refund.
The Bottom Line
Claiming the EITC and other federal tax credits may require a bit of effort, but much of the work is math you're already doing to file your taxes. Unlike tax deductions, which lower your tax bill indirectly by lowering your taxable income, tax credits reduce your tax bill dollar for dollar. Those tax savings, along with the potential for a refund, can help stretch your dollars farther—a welcome boost when you're trying to make ends meet.