Workers earning income in 2025 may be eligible for the Earned Income Tax Credit, a benefit designed to provide a tax break for low- to moderate-income individuals. The credit can result in hundreds or thousands of dollars in additional funds for qualifying taxpayers. However, approximately 20% of eligible individuals do not claim the credit, often because they are not required to file a return or are unaware of their eligibility.
The Earned Income Tax Credit, also referred to as EITC or EIC, is a dollar-for-dollar credit that reduces tax liability or increases a refund. Eligibility requires meeting specific criteria, including having earned income from employment, self-employment, or independent contracting. Income from sources like child support, Social Security benefits, retirement, or unemployment does not qualify.
Income thresholds for 2025 vary by filing status and number of dependent children. A single filer with no dependents must have an income below $19,104 to qualify. A married couple with three or more children can qualify with an income under $68,675. The credit amount itself depends on filing status, family size, and income level.
The EITC is a refundable credit that can reduce tax liability below zero, resulting in a refund. For example, a $1,000 tax bill with a $700 credit leaves $300 owed. A $4,000 credit due to a qualifying child could yield a $3,000 refund. The credit is available to filers without dependents, though amounts are typically larger for those with children.
By law, the Internal Revenue Service cannot issue EITC refunds until mid-February. This may delay refunds for early filers. The IRS states that most individuals filing online with direct deposit should receive their EITC refunds by March 3, 2026, barring other issues with the return.
Qualifying children increase the credit amount. A child must be under 19 at the tax year's end, or under 24 if a full-time student. There is no age limit for dependents who are permanently or totally disabled. The child must be a biological, adopted, stepchild, foster child, sibling, step-sibling, grandchild, niece, or nephew, and must have lived with the filer for over half the year with a valid Social Security number.
Filers without qualifying children must be between 25 and 64 years old, cannot be claimed as a dependent on another's return, and must meet marital status and adjusted gross income requirements. Special rules may allow military members and clergy to claim the credit. Taxpayers filing separately are generally ineligible. Additionally, foreign earned income or investment income exceeding $11,950 disqualifies a filer from the 2025 EITC.
To claim the credit for the 2025 tax year, due by April 15, 2026, filers must complete a Form 1040 or 1040-SR. Those with qualifying children must also complete a Schedule EIC, providing details such as birth dates and Social Security numbers. After filing, refunds are subject to the mid-February release date. If the IRS denies an EITC claim, a Form 8862 must be submitted to correct and resubmit the filing.
Investment income exceeding $11,950, including interest, dividends, capital gains, royalties, and passive rental income, disqualifies a filer from the 2024 federal EITC. Foreign-earned income also leads to disqualification. Adjusted gross income, calculated as taxable income minus deductions, determines eligibility. The IRS offers a free tool to estimate this figure.
Taxpayers can claim unclaimed EITC credits for up to three prior tax years by amending returns for those years. Previous credit amounts for 2024, 2023, and 2022 are available on the IRS website.