What is the max for earned income credit

You only qualify for the credit if you work to earn an income. That’s the “earned” part of its name. Then, your income level, marital status, and number of “qualifying” children are the three biggest factors in determining whether you get a tax credit and for how much. Although you don’t have to have a child to be entitled to a credit, you are less likely to qualify if you don’t. And if you qualify, you will get a much smaller credit without children.

Check out the accompanying table to see how the IRS breaks down potential earned income tax credits for 2021, based on those three major factors.

Earned Income Tax Credit Phases for 2021

Source: "Earned Income and Earned Income Tax Credit (EITC) Tables," IRS

The next logical question, then, is what’s a qualifying child? The IRS has certain relationship, age, and residency requirements. For instance, the child must be a son, daughter, adopted child, stepchild, foster child, or a descendent of any of these.2 Online tools can help determine whether your child qualifies.3

You might also ask, what’s income? For the purposes of an earned income tax credit, it’s money you earn in a given year either working for someone or running your own business. To get more specific, this tax credit relies on your adjusted gross income, or AGI, which is based on your earned income. For more on AGI, read “What Is Adjusted Gross Income?” 

If you’re also an investor, your investment income must be $10,000 or less as of 2021 – a notable increase from years past. 

The Earned Income Tax Credit is a tax credit that provides a tax break for low-income workers and families based on their wages, salaries, tips, and other pay, as well as earnings from self-employment.

The EITC has existed for decades but the IRS estimates that 1 out of 5 eligible Americans do not claim the credit. This year, thanks to President Biden’s American Rescue plan, the credit is more generous and open to more workers than ever.

The Earned Income Tax Credit lowers your taxes and is refundable

If you are eligible to receive the Earned Income Tax Credit, it will lower the amount of federal income taxes you are required to pay. If the credit you receive is worth more than the taxes you owe, you will get the rest of the money back through your federal income tax refund.

The Earned Income Tax Credit has no effect on federal benefits

The Earned Income Tax Credit is not considered income for any family or worker. Receiving the Earned Income Tax Credit will not change the amount you receive from any other Federal benefits, including unemployment insurance, Medicaid, SNAP (formerly food stamps), SSI, SSDI, TANF, WIC, Section 8, or Public Housing.

To learn more about whether the EITC applies to you, the IRS has a question and answer tool that can help you determine your eligibility: IRS EITC Assistant.

Insider's experts choose the best products and services to help make smart decisions with your money (here’s how). In some cases, we receive a commission from our partners, however, our opinions are our own. Terms apply to offers listed on this page.

• The earned income tax credit (EITC) can reduce taxes and increase refunds for low- and moderate-income workers and families.
• The dollar amount of credits ranges from $560 to $6,935 for 2022, depending on income, filing status, and dependents.
• The EITC was established in 1975 to help lower-income workers offset Social Security payroll taxes and rising food and energy costs.
• See Personal Finance Insider's picks for the best tax software »

The earned income tax credit, or EITC, is aimed at giving low- to moderate-income workers and families a tax break. The dollar amout of credits ranges from $560 to $6,935 for the 2022 tax year and from $600 to $7,430 in 2023. The amount you receive depends on your income, filing status, and how many children you have. Eligible workers without children can also claim the earned income tax credit.

In general, the less you earn, the greater the earned income credit. Since it's a refundable tax credit, lower-income taxpayers who have little to no income-tax liability can still receive the total amount of the credit in the form of a tax refund.

It's important to note that tax deductions and tax credits can both change the amount of tax you owe, but they work differently. Deductions lower the amount of your total income that is subject to taxation, while credits reduce the amount of tax you owe, and some, like the EITC, can provide a refund even if you don't owe any tax.

Who qualifies for the federal EITC? 

The EITC was established by the Tax Reduction Act of 1975 as a temporary way to help lower-income workers offset Social Security payroll taxes and rising food and energy costs. It was considered "both an anti-poverty program and an alternative to welfare because it incentivized work." The Revenue Act of 1978 made the EITC permanent.   

To qualify for the EITC for the 2022 tax year, you'll need: 

• At least $1 of earned income from employment or self-employment
• Less than $10,300 of investment income for the tax year
• No foreign income for which you claim the foreign earned income exclusion on Form 2555
• A valid Social Security number
• US citizenship or resident alien status
• A filing status other than married filing separately unless you meet new requirements for married but separated spouses
• A qualifying child who meets the age, relationship, residency, and joint return requirements
• Or, without a qualifying child, must have lived in the US for more than half the year, not be claimed as a dependent by anyone else, and be between the ages of 25 and 65 at the end of the tax year

There are special qualifying rules for military and clergy members and workers who have disability income or children with disabilities. To find out if you're eligible for the credit, you can use the EITC Assistant on the IRS website.

Quick tip: If you qualify for the EITC, you may be eligible for other tax credits, such as the child tax credit, the child and dependent care credit, and education credits. 

In addition to the basic requirements, your adjusted gross income (AGI) must be below the income thresholds to qualify. Here's a rundown:

Earned income tax credit for 2022

Dependents

Maximum AGI

(single or head of household)

Maximum AGI (married filing jointly)

Maximum EITC

0

$16,480

$22,610

$560

1

$43,492

$49,622

$3,733

2

$49,399

$55,529

$6,164

3 or more

$53,057

$59,187

$6,935

The income limits and maximum credits are increasing across the board for 2023. Here's what to expect:

Earned income tax credit for 2023

Dependents

Maximum AGI

(single or head of household)

Maximum AGI (married filing jointly)

Maximum EITC

0

$17,640

$24,201

$600

1

$46,560

$53,120

$3,995

2

$52,918

$59,478

$6,604

3 or more

$56,838

$63,398

$7,430

If you didn't claim the earned income tax credit for previous years and think you may have qualified, there may still be time. You can file an amended tax return to receive the credit for any (or all) of the previous three tax years for which you should have received the credit.

Important: You must file a tax return to get the earned income tax credit, even if you wouldn't need to file otherwise. 

How has the EITC changed? 

The American Rescue Plan Act (ARPA) of 2021 "expanded the impact of the EITC in a few ways, with some rules impacting just 2021 and others impacting both 2021 and future years," says Steve Wittenberg, director of legacy planning at the technology and investment firm SEI. 

For the 2021 tax year, there was a special rule that made it easier for people with no children to claim the credit and roughly tripled the amount they qualified for, notes Sallie Mullins Thompson, a CFP® professional and certified public accountant at her self-named tax and accounting firm in New York. 

Meanwhile, the limit for allowable investment income was bumped up from $3,650 in 2020 to $10,000 or more for 2021 and beyond.

ARPA also adjusted the requirements for married but separate spouses, "who can now claim the EITC if they don't file joint returns, they live with the qualified child for more than half the year, and either they are legally separated under state law or they don't have the same principal place of abode as the other spouse for at least the last six months of the year," says Wittenberg.

The bottom line

The earned income tax credit can provide a substantial tax break to lower-income workers and families. If you fall within the income and filing guidelines, be sure to claim the credit on your return when you file your taxes — but keep in mind that you won't get your refund right away. By law, the Internal Revenue Service has to wait until March to issue refunds to taxpayers who claim the EITC. 

"Due to years of fraudulent filings for this credit, the IRS has implemented more restricted processing procedures, thus delaying refunds for certain situations until further investigation can be carried out," says Mullins Thompson.