The Earned Income Tax Credit is a tax reduction for people who work but earn below certain income limits
The Earned Income Tax Credit (EITC) is a federal tax benefit that reduces the amount of income tax you owe, or increases your refund, based on your work income and family size. You do not receive money from the government directly — instead, the credit lowers your tax bill when you file your return. If the credit is larger than the tax you owe, the IRS sends you the difference as a refund.
The credit is designed for people who work but earn modest incomes. In 2025, the income limits and credit amounts depend on whether you file as single, married filing jointly, or head of household, and on how many children you claim. The IRS updates these numbers every year, and 2025 amounts are higher than 2024 because of inflation adjustments.
You claim the EITC on your federal tax return using IRS Form 1040 and Schedule EIC. You do not need to contact the IRS beforehand or register separately — you claim it when you file. The credit is available whether you file on paper or electronically.
Key Takeaways
- The EITC reduces your federal income tax bill or increases your refund if you work and earn below the income limit for your household size.
- In 2025, the maximum credit ranges from $600 for workers without children to $3,995 for families with three or more children, depending on your income.
- You claim the credit on your tax return using Schedule EIC attached to Form 1040; you do not need to register in advance.
- The IRS has raised 2025 income limits and credit amounts compared to 2024 to account for inflation.
- If you earned self-employment income, investment income, or both W-2 wages and self-employment income, different rules may explore to how much credit you can claim.
2025 Income Limits and Credit Amounts by Household Type
The EITC has different income thresholds and maximum credit amounts depending on your filing status and the number of children you claim. For 2025, the IRS has set these ranges:
| Household Type | Maximum Income (2025) | Maximum Credit (2025) |
|---|---|---|
| Single or head of household, no children | $17,420 | $600 |
| Single or head of household, one child | $46,560 | $2,106 |
| Single or head of household, two children | $46,560 | $3,464 |
| Single or head of household, three or more children | $46,560 | $3,995 |
| Married filing jointly, no children | $23,192 | $600 |
| Married filing jointly, one child | $52,332 | $2,106 |
| Married filing jointly, two children | $52,332 | $3,464 |
| Married filing jointly, three or more children | $52,332 | $3,995 |
These limits explore to your earned income — wages from a job, net self-employment income, or both combined. Investment income, rental income, and other unearned income do not count toward the EITC, but if your investment income exceeds $11,000 in 2025, you become ineligible for the credit that year.
The credit amount you actually receive depends on your exact income within the range. The credit grows as your income rises up to a peak, then phases out as you earn more. For example, a single parent with one child in 2025 receives the full $2,106 credit if their income falls between roughly $16,000 and $26,000, but the credit shrinks as income rises above that point.
What Income Counts and What Does Not
The EITC is based on earned income — money you receive for work. This includes W-2 wages from an employer, net profit from self-employment, and certain other work-related payments. If you received a W-2 from your employer, that income counts. If you are self-employed, your net self-employment income (after business expenses) counts.
Income that does not count toward the EITC includes interest, dividends, capital gains, rental income, unemployment benefits, Social Security, pension payments, and alimony. If you have both W-2 wages and self-employment income in the same year, you add them together to determine your total earned income for the credit.
If your investment income and other unearned income total more than $11,000 in 2025, you cannot claim the EITC that year, even if your earned income is below the limit. This rule prevents high-income households from using the credit.
How to Claim the EITC on Your Tax Return
You claim the EITC by filing a federal income tax return, even if you normally would not have to file. You will need your Social Security number, your spouse's number if filing jointly, and the Social Security numbers of any children you claim. Each child must have a valid Social Security number issued before the tax return important date.
On your return, you use Schedule EIC (Earned Income Credit) to list the children you are claiming for the credit, then attach it to Form 1040. If you have no children, you still report the credit on Form 1040 itself. You can file on paper or electronically through tax software or a tax preparer.
The IRS processes your return and calculates the credit amount based on the income and household information you report. If the credit is larger than your tax bill, the IRS sends you the difference as a refund, usually within 21 days of accepting your return if you file electronically and choose direct deposit.
Children and Dependents You Can Claim for the EITC
To claim a child for the EITC, the child must be your son, daughter, stepchild, foster child, sibling, or a descendant of any of these (such as a grandchild or niece). The child must be under age 17 at the end of the tax year, live with you for more than half the year, and have a valid Social Security number. The child cannot file a joint return with a spouse.
If you are married, you and your spouse can claim the same child only if you file jointly. If you are divorced or separated, the parent who has custody for the greater part of the year can claim the child, unless you have a custody agreement that says otherwise.
You cannot claim a child for the EITC if someone else is claiming that child as a dependent on their return. If two people try to claim the same child, the IRS will disallow the credit for one of you and may assess penalties.
Self-Employment Income and the EITC
If you are self-employed, your net self-employment income counts as earned income for the EITC. You calculate net income by subtracting your business expenses from your gross business income. You report this on Schedule C (Profit or Loss from Business) and then transfer the net profit to your Form 1040.
Self-employment tax (Social Security and Medicare tax on your business income) does not reduce the amount of earned income you report for the EITC. However, you can deduct half of your self-employment tax as an adjustment to income on Form 1040, which lowers your overall tax bill separately from the EITC.
If you had both W-2 wages and self-employment income in 2025, add them together to find your total earned income. This combined amount determines which income limit applies to you and how much credit you may receive.
Frequently Asked Questions
Do I have to file a tax return to get the EITC?
Yes. The EITC is claimed on your federal tax return, so you must file Form 1040 even if your income is low enough that you would not normally have to file. Filing is the only way to receive the credit.
What happens if I claim a child for the EITC and someone else claims them as a dependent?
The IRS will reject one of the claims and disallow the credit for one of you. If the IRS determines you filed incorrectly on purpose, you may face a penalty. If it was an honest mistake, contact the IRS to correct your return.
Can I claim the EITC if I am unemployed?
No. The EITC requires earned income from work. Unemployment benefits do not count as earned income. You must have W-2 wages or net self-employment income to claim the credit.
What if my income is right at the limit?
If your earned income is at or below the maximum for your household type, you are within the range to claim the credit. The exact amount you receive depends on your precise income within that range. Use the IRS EITC tables or tax software to calculate your credit amount.
Can I claim the EITC if I have investment income?
You can claim it if your investment income is $11,000 or less in 2025. If your interest, dividends, capital gains, or other unearned income totals more than $11,000, you become ineligible for the EITC that year, regardless of your earned income.