EITC Calculator

The Earned Income Tax Credit (IRC §32) is a refundable federal tax credit for low- to moderate-income workers — the largest anti-poverty cash-transfer program in the U.S. tax code (~26M filers receive it annually). Refundable means the credit can exceed your tax liability and the excess comes back as a refund. The credit phases IN as earned income rises from $0 (so 8% of low-wage workers can claim some), reaches a plateau (the maximum credit), then phases OUT at a sharper rate. For 2025, the max ranges from $649 (no kids) to $7,640 (3+ kids). For 2026 the maximums jumped meaningfully — including a much wider MFJ phaseout window under OBBBA §32(b)(2)(B).

Five hard tests under IRC §32(c): (1) you need earned income from a job or self-employment — investment-only filers don't qualify; (2) a valid SSN for you, your spouse if MFJ, and every qualifying child claimed; (3) U.S. citizen or full-year resident alien; (4) cannot file Form 2555 (foreign earned income exclusion); (5) investment income at or below the year's cap ($11,950 for 2025, $12,200 for 2026). Married filers MUST file MFJ — except since 2021, an MFS filer who is separated and not living with their spouse the last 6 months of the year may qualify (American Rescue Plan §9622, made permanent by IRS guidance). Workers with no qualifying child must be between 25 and 64 years old (formerly 25-64, briefly 19-64 in 2021 only).

Per Pub 596 and IRC §32(c)(2): wages on Form W-2 (including taxable scholarships if you are not pursuing a degree), tips, union strike benefits, long-term disability received before minimum retirement age, statutory employee earnings, AND net Schedule C/F self-employment income (after deducting one-half of SE tax). Combat pay can be elected as earned income under §32(c)(2)(B)(vi). What DOES NOT count: investment income (interest, dividends, capital gains, rental net income — these count against your investment-income cap), Social Security benefits, alimony, child support, pension/IRA distributions, unemployment, pay received while incarcerated, and gambling/prize winnings.

The EITC has three regions (single/HoH, 2 kids, 2025 example, max $6,791): (1) PHASE-IN — credit rises at 40% on every $1 of earned income, from $0 to phase-in end ($16,978 → max). (2) PLATEAU — credit stays at max while earned income is between phase-in end and phase-out start ($16,978 to $21,160 single). (3) PHASE-OUT — credit shrinks at 21.06% on each dollar of earned income (or AGI, whichever is higher) above the phase-out start, hitting $0 at the phase-out end ($53,413 single). The phase-out rate creates a 21% effective marginal tax on this band — combined with payroll tax, the working poor often face a higher marginal rate than millionaires.

Per IRC §32(i), you forfeit the entire EITC if investment income exceeds the cap — $11,950 for 2025, $12,200 for 2026 (Rev. Proc. 2025-32). This is a CLIFF, not a phase-out: $11,949 of dividends → full EITC, $11,951 → $0 EITC. Investment income for §32(i) includes interest (taxable + tax-exempt), dividends, net capital gains, net rental and royalty income, passive activity income. Pre-2021 it was $3,650 — the American Rescue Plan permanently raised it to track the original 1986 statutory level adjusted for inflation. Common surprise: a one-off capital-gain distribution from a mutual fund late in the year can wipe out the credit retroactively.

Yes, but the credit is much smaller — $649 max for 2025 vs $7,640 with 3+ kids. Age window: 25-64 inclusive (since 2022; ARPA briefly lowered it to 19-24 for 2021 only). Cannot be a qualifying child or dependent of another taxpayer. Cannot file MFS unless separated. Phaseout starts very low ($10,100 single, $16,810 MFJ for 2025) and ends quickly. Most childless workers earning above ~$18-19k are phased out. A common policy proposal (Build Back Better Act 2021, didn't pass) was to triple the no-kids EITC — current discussion has stalled.

Four tests (IRC §32(c)(3) + §152): (1) RELATIONSHIP — your son, daughter, stepchild, foster child, sibling, half-sibling, step-sibling, or a descendant of any of these (grandchild, niece, nephew); (2) AGE — under 19 at year-end, OR under 24 if a full-time student for 5+ months, OR any age if permanently and totally disabled; (3) RESIDENCY — lived with you in the U.S. for more than half the year (military assigned abroad counts as U.S.); (4) JOINT RETURN — child cannot file their own joint return unless solely to claim a refund. The QC must have a valid SSN — ITINs do not qualify the child for EITC. Tiebreaker rules (§152(c)(4)) decide when two filers could each claim the same child: parent > non-parent, longer-residency parent wins, higher-AGI parent wins last.

IRC §32(k) imposes "reckless or intentional disregard" and "fraud" disallowance: if the IRS denies your EITC for one of those reasons, you cannot claim it again for 2 years (reckless/intentional) or 10 years (fraud). To reclaim after the period, you must file Form 8862 (Information to Claim Certain Credits After Disallowance) attached to the first return claiming EITC. Math-error denials (forgetting an SSN, miscounting children) do not trigger §32(k) — but you must still file Form 8862 the next time you claim. Common audit triggers: claiming a child not actually living with you, claiming children of an ex-spouse without the §152(e)(2) signed Form 8332 release.

The PATH Act of 2015 requires the IRS to HOLD all refunds containing EITC or ACTC until after February 15. In practice, refunds with EITC are released the week of February 27-March 6, regardless of how early you filed. E-file with direct deposit lands within 21 days of release (so early March for January filers). Paper file: 6-8 weeks AFTER the PATH hold. The "Where's My Refund?" tool (IRS.gov) updates with status. Common reasons for delay beyond PATH: IRS verification of identity (Letter 5071C or 4883C), conflict over a child claim, math errors flagged for review.

Yes — 32 states + DC + Puerto Rico offer a state EITC as a percentage of the federal credit. Most common range: 10-40% of federal. California's CalEITC adds an additional Young Child Tax Credit ($1,154 in 2024 for kids under 6). NY 30%, MD 50% (50% of federal, refundable). Some states (CO, NM, NJ) extended eligibility to ITIN filers, who cannot claim the federal credit. State-EITC amount is automatic if you claim the federal credit — most state tax software pulls it through. Worth $300-2,500 on top of the federal credit for many filers.

Yes — Schedule C net profit counts as earned income under §32(c)(2)(A)(ii), with the catch that you reduce it by one-half of self-employment tax (§32(c)(2)(A)(i)). Audit risk is materially higher for SE EITC claims (IRS has long flagged "phantom Schedule C" filers who report just enough loss to maximize EITC). Keep contemporaneous receipts, 1099-NECs, mileage logs, business bank statements. Reconstruct income honestly — claiming MORE Schedule C income than actually earned (to hit the plateau) is fraud under §32(k), triggering the 10-year ban.