What Happened?

A report published by Congress' research branch on Sept. 14 breaks down how the Earned Income Tax Credit works, who qualifies, and what Congress could change about it. In 2023, 24.5 million tax returns included the credit, which paid out $65.3 billion in total benefits. That is roughly one in every six individual tax returns filed in the U.S.

The Earned Income Tax Credit is both a tax provision and a cash benefit, because a recipient does not need to owe taxes to receive its refundable portion. The report says that of the $65.3 billion in Earned Income Tax Credit benefits in 2023, $55.9 billion exceeded income and other tax liabilities and was paid as refunds.

That means the credit functions less like a tax break and more like a direct payment for tens of millions of working families.

Why Does it Matter to Me?

For 2026, the maximum Earned Income Tax Credit ranges from $664 for a taxpayer with no qualifying children to $8,231 for a taxpayer with three or more qualifying children, according to the report. That upper figure is roughly two months of take-home pay for someone earning minimum wage full time.

To qualify, a filer generally must have earned income, file a federal return, meet residency rules, provide work-authorized Social Security numbers, and stay below the applicable income limits. For an unmarried filer with one child in 2026, the report says the credit has a $23,890 phaseout threshold and is completely phased out at $51,593 of adjusted gross income or earned income, whichever is greater. Married couples filing jointly get phaseout thresholds $7,270 higher than unmarried filers with the same number of children.

Some Medicaid-waiver payments and elected combat pay are allowed, while prison labor income, pensions, and certain other payments are excluded. If Congress changes the rules, those thresholds and income definitions could shift, directly affecting whether a family qualifies and how much they receive.

Both Sides, Now

A report updated Sept. 14 explains the Earned Income Tax Credit and who receives it, and it notes that changes to the credit would affect eligibility rules, payment amounts, administration, and the treatment of refunds in other federal programs. Any change to the credit would require a vote in Congress, since it is written into federal tax law.

The 2021 temporary expansion of the Earned Income Tax Credit for taxpayers without qualifying children expired at the end of that year, according to a Congressional Research Service report. They argue the credit lifts working families out of poverty and that the 2021 expansion showed broader eligibility is achievable.

The Internal Revenue Service (IRS) estimated that 81 percent of eligible recipients received the Earned Income Tax Credit for 2022, while unclaimed benefits represent roughly 11 percent to 15 percent of potential benefits. That gap cuts both ways in the debate, with some arguing it signals outreach failures and others pointing to improper-payment concerns.

What Happens Next?

The Earned Income Tax Credit is authorized by Section 32 of the Internal Revenue Code and administered through the federal income tax system.

Congress could adjust the formulas, income thresholds, or eligibility rules through tax legislation, but no such measure is currently on the floor calendar. The report was updated Sept. 14, giving lawmakers current data as they weigh any potential changes to the credit ahead of the next tax filing season.

For families who rely on the credit, the filing season that opens in January 2027 would be the first point at which any legislative change could take effect, if Congress acts before then.

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