Earned Income Tax Credit (EITC) definition
The Earned Income Tax Credit is a refundable credit for low‑ and moderate‑income workers that lowers their tax bill and can result in a refund.
Published Jan 30, 2026by the USAFacts team
The Earned Income Tax Credit (EITC) is a refundable tax credit that helps low-to moderate-income workers. The EITC reduces the amount of federal income taxes they owe. Some taxpayers can also get a refund, even if they owe no taxes.
To qualify for the Earned Income Tax Credit, taxpayers must:
- Have earned income from working (such as wages, salaries, tips, or self-employment).
- Meet income limits based on filing status and the number of qualifying children they have. (The IRS updates these thresholds each year.)
- Have a valid Social Security number. Spouses and qualifying children must also have Social Security numbers
- File taxes using an allowable status — taxpayers who file as Married Filing Separately are not eligible for the EITC.
- Be a US citizen or resident alien for the entire filing year (or meet certain special rules, if the filer is a nonresident alien).
- Not be claimed as a dependent or qualifying child on someone else’s tax return.
- Have investment income below the annual limit set by the IRS. (This limit is also updated annually).
Meet three criteria, if they do not have a qualifying child:
- Be at least 25 years old but under 65 at the end of the tax year
- Live in the US for more than half the year
- Not qualify as someone else’s dependent
Household income
The median household income in the US was about $82,000 in 2024
What income qualifies as earned income?
Earned income means income received from working, whether it’s from a job or self-employment.
Earned income includes:
- Wages, salaries, tips, and other taxable employee pay
- Net earnings from self-employment or from operating a farm or business
Earned income does not include:
- Investment income (interest, dividends, capital gains)
- Most pensions
- Social security benefits
- Unemployment income
Keep exploring
- Who doesn’t pay federal income taxes? - Whether someone owes federal income tax depends on their income, deductions, and credits. In 2023, 3 in 10 filers owed nothing.
- How did the child tax credit change over time? - The American Rescue Plan temporarily increased the child tax credit per child and expanded eligibility for lower income families. Now the credit is back to pre-pandemic levels.
- How much money does the government collect per person? - Individual income taxes accounted for more than half of total revenues for the federal government in 2022.
- Who pays the most income tax? - In 2023, the top 5% of earners collectively paid nearly $1.3 trillion in income taxes, or about 60% of the national total.
