ILR School

The Earned Income Tax Credit (EITC): An Overview

dc.contributor.authorFalk, Gene
dc.description.abstractThe Earned Income Tax Credit (EITC or EIC) began in 1975 as a temporary program to return a portion of the Social Security tax paid by lower-income taxpayers (the credit was, and remains, calculated as a percentage of earned income, with no direct link to Social Security taxes paid by the tax filer), and was made permanent in 1978. In the 1990s, the program became a major component of federal efforts to reduce poverty, and is now the largest need-tested, anti-poverty cash entitlement program. Childless adults in 2011 (the latest year for which data are available) received an average EITC of $264, families with one child received an average EITC of $2,199, families with two children received an average EITC of $3,469, and families with three or more children received an average EITC of $3,750. A low-income worker must file an annual income tax return to receive the EITC and meet certain requirements for income and age. A tax filer cannot be a dependent of another tax filer and must be a resident of the United States unless overseas because of military duty. The EITC is based on income and whether the tax filer has a qualifying child. The EITC interacts with several nonrefundable federal tax credits to the extent lower-income workers can use the credits to reduce tax liability before the EITC. Income from the credit is not used to determine eligibility or benefits for need-tested programs. The maximum earned income amounts, phase-out income levels, disqualifying investment income level, and maximum credit amounts are adjusted annually to reflect inflation. The actual amount of the credit a tax filer receives is determined by the tax filer’s earned income and number of qualifying children using these inflation adjusted parameters.
dc.description.legacydownloadsCRS_The_Earned_Income_Tax_Credit.pdf: 221 downloads, before Oct. 1, 2020.
dc.relation.hasversionA more recent version of this report can be found here:
dc.subjectEarned Income Tax Credit
dc.subjectfederal benefits
dc.titleThe Earned Income Tax Credit (EITC): An Overview
local.authorAffiliationFalk, Gene: Congressional Research Service


Original bundle
Now showing 1 - 1 of 1
Thumbnail Image
372.17 KB
Adobe Portable Document Format