The EITC is “refundable,” meaning that if the value of the credit exceeds the amount of federal income tax a low-paid worker owes, the worker receives the difference in the form of a refund. As the figure below shows, workers receive the credit beginning with their first dollar of earned income the amount of the credit rises with earned income until it reaches a maximum level and then phases out at higher income levels (see tables 1 and 2). The amount of the EITC depends on a recipient’s income, marital status, and number of children. (See below section, “Fixing the Meager EITC for Workers Not Raising Children.”) The American Rescue Plan expanded the EITC for this group for 2021 only. During tax year 2020, for example, the average EITC for a filer without children was just $295. Working adults who aren’t raising children at home and had incomes below $17,640 if they are unmarried ($24,210 for a married couple) in 2023 can receive a very small EITC. During the 2020 tax year (the latest year for which these IRS data are available), the average EITC was $3,099 for a family with children. When filing taxes for 2023 (due in April 2024), working families with children that have annual incomes below about $46,600 to $63,400 (depending on marital status and number of dependent children) may be eligible for the federal EITC. In the 2020 tax year, 25 million working families and individuals in every state received the EITC.

2020 tax tables for seniors