Earned Income Credit (EIC)
What is earned income credit?
Also known as earned income tax credit (EITC), earned income credit (EIC) is a tax break available to US workers and self-employed individuals whose incomes are considered low-to-moderate. In addition to the federal credit, several US states and local governments, including the District of Columbia, Guam, and Puerto Rico, offer similar EITC programs.
What is EITC?
EIC and EITC describe the same thing, but with the word ‘tax’ added to the acronym. EITC stands for earned income tax credit.
What are the EIC benefits for individuals and families?
According to the Center on Budget and Policy Priorities, the EIC helps reduce poverty. Millions of working households, especially those with children, rely on this and similar tax credits to supplement lower earnings each year. In turn, it’s also a financial uplift for the economy.
When employees claim EIC on their individual returns, it reduces the amount of taxes they owe and may result in a larger refund. As of December 2024, approximately 23 million workers and families received $64 billion in EIC. The average amount received nationwide in TY 2023 was $2,743.
HR managers in community organizations, schools, and businesses can promote EITC Awareness Day to increase awareness of this valuable program and help determine whether individuals are eligible.
Who qualifies for earned income credit?
Federal EIC is available for workers with and without dependents, but they must meet criteria to qualify. The IRS states that to qualify for the EIC, workers must meet the following benchmarks:
- Have earned income (for example, wages, tips, net self-employment earnings)
- Have investment income below the limit
- Have a valid Social Security Number (SSN)
- Meet special rules for separated spouses
- Be a US citizen or resident alien all year
- Not file Form 2555, Foreign Earned Income
Next, eligible workers must also fulfill other criteria to apply for this tax credit. Rules for workers with one or more qualifying children include:
- The child meets the relationship, age, residency, and joint return tests
- The child isn’t documented by another taxpayer claiming EIC
- The worker isn’t a qualifying child of another taxpayer
Rules for workers without qualifying children include:
- You meet the age requirements
- You’re not a dependent of another taxpayer
- You’re not a qualifying child of another taxpayer
- You’ve lived in the US for more than half the year
Special rules apply to the US military, clergy, as well as people and their relatives with disabilities. The IRS offers a handy EIC calculator online to determine eligibility status.
How to claim EIC on your tax return
After determining they qualify, employees must complete specific IRS forms to claim this tax credit on their return. Depending on their situation, they’ll need to submit the following document(s):
- Form 1040, US Individual Income Tax Return
- Form 1040-SR, US Tax Return for Seniors
- Schedule EIC (for people with children)
How much is earned income credit?
In tax year 2025, the maximum credit is worth up to $8,046 with three or more qualifying children.
Can I claim EIC for past years?
Yes. If you haven’t claimed EIC in previous years and think you may have been eligible, there may still be time for you to claim this tax credit. You have three years from the due date of your tax return to file and claim an earned income credit for a given tax year.
For more information, see Publication 596, Earned Income Credit (EIC).
How is the earned income credit calculated?
You can use the EIC calculator to work out if you’re eligible for EIC, if you have any qualifying children or family members, your filing status and the estimated amount of your credit.
You will need the following information:
- Income statements, including W-2s and 1099s
- Expenses or adjustments to your income
- Documents that highlight taxes withheld, or money paid to you.
For more information, use the EITC assistant.