Earned Income Credit (EITC)

The earned income credit, often called the EITC or EIC, is a refundable credit for people who work and have low to moderate income. Because it is refundable, it can produce a refund even when you owe no tax. It is also one of the credits the IRS reviews most closely, so understanding the rules before you claim it matters. This guide covers the 2025 and 2026 amounts and the tests behind them.

2025 and 2026 amounts

The credit rises as earned income rises, levels off at a maximum, then phases out. The "income limit" below is the amount at which the credit reaches zero. Both earned income and adjusted gross income (AGI) must be under the limit.

The investment income limit (interest, dividends, capital gains and certain other income) is $11,950 for 2025 and $12,200 for 2026. The IRS publishes a table in the Form 1040 instructions that gives the exact credit at each income level.

Who qualifies

Everyone claiming the credit must:

• Have earned income, such as wages, net self-employment earnings, or certain other taxable pay.
• Have a valid SSN issued by the Social Security Administration by the due date of the return, including extensions. An SSN issued only to apply for a federally funded benefit does not count. The same applies to your spouse on a joint return.
• Be a U.S. citizen or resident alien all year. If you were a nonresident alien for part of the year, you can claim the credit only on a joint return where you elect to be treated as a resident.
• Not file Form 2555 to exclude foreign earned income.
• Meet the investment income limit.
• If married, generally file jointly. A separated spouse can claim the credit on a separate return only if specific conditions are met, including living apart for the last six months of the year.

If you have a qualifying child

The child must meet four tests: relationship, age, residency (the child lived with you in the United States for more than half the year) and joint return. Only one person can use a child to claim the credit. The child needs a valid SSN to increase your credit; if the child has no valid SSN you may still be eligible for the credit without a child. You must file Schedule EIC.

If you have no qualifying child

You must be at least 25 and under 65 at the end of the year, cannot be someone else's dependent or qualifying child, and must have lived in the United States for more than half the year.

Example

Example: Rosa is a single parent with two qualifying children, all with valid SSNs. In 2025 she earns $30,000 in wages and has no other income. Her income is above the point where the credit begins to phase out ($23,350 for non-joint filers), so she does not receive the $7,152 maximum. Using the IRS's 2025 EIC table, her credit for earned income between $30,000 and $30,050 is $5,746. She would receive that credit in addition to any child tax credit for which she qualifies.

Why the IRS denies claims

The IRS commonly questions claims in which the child does not meet the residency test, the child is claimed by two people, income is not reported consistently, or the SSN is missing or invalid. If a claim is denied or reduced for a reason other than a math or clerical error, you generally must attach Form 8862 to your next return that claims the credit. A ban can apply: two years after a final determination that a claim was due to reckless or intentional disregard of the rules, and ten years after a determination of fraud. See improper credit claims and bans.

Refunds for returns that claim the EITC or the additional child tax credit are held until mid-February while the IRS verifies the claim. This is the law, not a sign of a problem with your return.

Self-employed filers

Net earnings from self-employment count as earned income, so a part-time freelancer or a gig worker may qualify. The credit is based on net profit after business expenses, so claiming more expenses lowers the credit while also lowering tax. Self-employment tax is figured separately. If you receive a letter about the credit, see is this IRS letter real?

Illinois

Illinois has its own earned income credit. Under the Illinois instructions you can qualify with an IRS-issued ITIN in place of an SSN, and some people aged 18 to 24 or 65 and older without qualifying children can qualify as well. Illinois also has a child tax credit for tax years 2024 and 2025 tied to its earned income credit. See our Illinois guide and the Illinois Department of Revenue instructions linked above.

How we can help

We can review whether you and your children meet each test, gather proof of residency and income, respond to IRS letters about credit claims and prepare Form 8862 when it is needed. See individual tax preparation or contact us.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.