Earned Income Tax Credit
About Earned Income Tax Credit
The Earned Income Tax Credit, enacted in 1975, is a refundable tax credit for low to moderate income workers. The credit is refundable, meaning that if it exceeds the tax owed, the excess is paid as a refund. The EITC lifts approximately 5 million people out of poverty annually, including 3 million children. The maximum credit in 2024 is 7,830 for a family with three or more children. The EITC has broad bipartisan support because it encourages work and targets assistance precisely. However, the EITC has a high improper payment rate, estimated at 24 percent. The EITC is complex to claim, and many eligible workers do not claim it. The IRS partners with community organizations to promote EITC awareness.
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