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The Earned Income Tax Credit (EITC): An Overview

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The Earned Income Tax Credit (EITC): An Overview

January 19, 2016April 11, 2017 (R43805)
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Summary

The Earned Income Tax Credit (EITC) is a refundable tax credit available to eligible workers earning relatively low wages. Because the credit is refundable, an EITC recipient need not owe taxes to receive the benefit. Eligibility for and the amount of the EITC are based on a variety of factors, including residence and taxpayer ID requirements, the presence of qualifying children, age requirements for childless recipients, and the recipient's investment income and earned income. Tax filers with income above certain thresholds—these thresholds are based on marital status and number of qualifying children—are ineligible for the credit.

The EITC varies based on a recipient's earnings. Specifically, the EITC equals a fixed percentage (the "credit rate") of earned income until the credit amount reaches its maximum level. The EITC then remains at its maximum level over a subsequent range of earned income, between the "earned income amount" and the "phase-out amount threshold." Finally, the credit gradually decreases to zero at a fixed rate (the "phase-out rate") for each additional dollar of adjusted gross income (AGI) (or earnings, whichever is greater) above the phase-out amount threshold. The specific values of these EITC parameters (e.g., credit rate, earned income amount) vary depending on several factors, including the number of qualifying children a tax filer has and his or her marital status. For the 20152017 tax year, the maximum EITC for a tax filer without children is $503510 per year. In contrast, the 20152017 maximum EITC for a tax filer with one child is $3,359400 per year; for two children, $5,548616 per year; and for three or more children, $6,242318 per year.

Two temporary modifications to the EITC were enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), extended by P.L. 111-312 and P.L. 112-240, and made permanent by the Protecting Americans from Tax Hikes (PATH) Act (Division Q of P.L. 114-113). The first modification was a larger credit for families with three or more children, while the second reduced the EITC's marriage penalty.

The EITC is provided to individuals and families once a year, in a lump sum payment after individuals and families file their federal income tax returnreturns. The credit may be received in one of three ways: (1) a reduction in federal tax liability; (2) a refund from the Treasury if the tax filer has no income tax liability; or (3) a combination of a reduced federal tax liability and a refund. The amount of the credit a tax filer receives is based on the prior year's income, earnings, and family composition (marital status and number of qualifying children). That is, the EITC paid in 2016 will be based on factors from 2015earned based on 2017 earnings will not be paid until 2018.

The EITC cannot be counted as income in determining eligibility for or the amount of any federally funded public benefit program. An EITC refund that is saved by a tax filer does not count against the resource limits of any federally funded public benefit program for 12 months after the refund is received.

In 2013For tax year 2014 (returns filed in 2015), a total of $68.13 billion was claimed by 28.85 million tax filers (19% of all tax filers), making the EITC the largest need-tested anti-povertyantipoverty cash assistance program. In that year, 97% of all EITC dollars were claimed by families with children. However, there was considerable variation in the share of returns claiming the EITC by state, with a greater share filed in certaincertain southern states compared to other regions of the country.


The Earned Income Tax Credit (EITC): An Overview

Introduction

The Earned Income Tax Credit (EITC) is a refundable tax credit available to eligible workers with relatively low earnings. Because the credit is refundable, an EITC recipient need not owe taxes to receive the benefit. The credit is authorized by Section 32 of the Internal Revenue Code (IRC) and administered as part of the federal income tax system. In 2013For tax year 2014 (returns filed in 2015), a total of $68.13 billion was claimed by 28.85 million tax filers, making the EITC the largest need-tested anti-povertyantipoverty cash assistance program.

Under current law, the EITC is calculated based on a recipient's earned income, using one of eight different formulas, which vary depending on several factors, including the number of qualifying children a tax filer has (zero, one, two, or three or more) and his or her marital status (unmarried or married). All else being equal, the amount of the credit tends to increase with the number of eligible children the EITC claimant has. Indeed, most of the benefits of the EITC—97% of EITC dollars in 2013for 2014—go to families with children.

Two temporary modifications to the EITC were enacted under the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5), extended by P.L. 111-312 and P.L. 112-240, and made permanent by the Protecting Americans from Tax Hikes (PATH) Act (Division Q of P.L. 114-113). The first modification was a larger credit for families with three or more children, while the second reduced the EITC's marriage penalty.

This report provides an overview of the EITC, first discussing eligibility requirements for the credit, followed by how the credit is computed and paid. The report then provides data on the growth of the EITC since it was first enacted in 1975. Finally the report concludes with data on the EITC claimed on 20132014 tax returns, examining EITC claims by number of qualifying children, income level, tax filing status, and location of residence.

Eligibility for the EITC

A tax filer must fulfill the following requirements to claim the EITC:

  • 1. The tax filer must file a federal income tax return.1
  • 2. The tax filer must have earned income.
  • 3. The tax filer must meet certain residency and identification requirements.
  • 4. The tax filer's children must meet relationship, residency, and age requirements to be considered qualifying children for the credit.
  • 5. Childless workers who claim the credit must be between ages 25 and 64. (This age requirement does not apply to EITC claimants with qualifying children.)
  • 6. The tax filer's investment income must be below a certain amount.
  • 7. The tax filer must not be disallowed the credit due to prior fraud or reckless disregard of the rules when they previously claimed the EITC.

Additionally, a tax filer with income above a certain dollar amount (labelled as "income where credit = 0" in Table 1) will be ineligible for the credit. Given that this income level is dependent on the number of qualifying children and marital status of the tax filer, this requirement is discussed in greater detail in the section of the report entitled "Calculating the EITC."

Requirements (1) through (7) are discussed in detail below.

Filing a Federal Income Tax Return

To be eligible for the EITC, a person must file a federal income tax return. Those who do not file a federal income tax return cannot receive the EITC.

The EITC can be claimed by taxpayers filing their tax return as married filing jointly, head of household, or single.2 Tax filers cannot claim the EITC if they use the filing status of married filing separately. If the tax filer has a qualifying child, the tax filer must include the child's name and Social Security number on a separate schedule (Schedule EIC) filed with the federal tax return.3

Earned Income

A tax filer must have earned income to claim the EITC. Earned income for the EITC is defined as wages, tips, and other compensation included in gross income. It also includes net self-employment income (self-employment income after deduction of one-half of Social Security payroll taxes paid by a self-employed individual).

In addition, service membersservicemembers may elect to include combat pay in their earnings when calculating the EITC. All income earned by a member of the Armed Forces while in a designated combat zone is considered combat pay and is normally not included in taxable income. However, a tax filer may elect to include combat pay as earnings for the purpose of calculating the EITC.4 Generally, service membersservicemembers will make this election if it results in a larger credit. (Using combat pay to calculate the EITC does not make the combat pay taxable income.)

Certain forms of income are not considered earnings for the purpose of the EITC. These include pension and annuity income, income of nonresident aliens not from a U.S. business, income earned while incarcerated for work in a prison, and TANF benefits paid in exchange for participation in work experience or community service activities.

Finally, tax filers who claim the foreign earned income exclusion (i.e., they file Form 2555 or Form 2555EZ with their federal income tax return) are ineligible to claim the EITC.5

Residency and Identification Requirements

Under current law, an EITC recipient must be a resident of the United States, unless the recipient resides in another country because of U.S. military service. To be eligible for the credit, the tax filer must provide valid Social Security numbers (SSNs) for work purposes6 for themselves, spouses if married filing jointly, and any qualifying children. (U.S. citizenship is not required to be eligible for the credit. SSNs do not indicate U.S. citizenship.) Nonresident aliens—those thatwho do not have green cards or do not spend sufficient time in the United States—are generally ineligible for the EITC.7

Qualifying Children

An EITC recipient's qualifying child must meet three requirements.8 First, the child must have a specific relationship to the tax filer (son, daughter, step child or foster child,9 brother, sister, half-brother, half-sister, step brother, step sister, or descendent of such a relative). Second, the child must share a residence with the taxpayer for more than half the year in the United States.10 Third, the child must meet certain age requirements; namely, the child must be under the age of 19 (or age 24, if a full-time student) or be permanently and totally disabled.

As a result of these three requirements, a child may be the qualifying child of more than one tax filer in the same household. For example, a child who lives with a single parent, grandparent, and aunt in the same home could be a qualifying child of all three of these individuals. But only one of these individuals can claim the qualifying child for the EITC, and the others cannot. Indeed, it appears that under current law, the other individuals are also ineligible to claim the childless EITC.11 In the case where the tax filers cannot agree on who claims the child, there are "tie-breaker" rules for who can claim the child for the EITC.12

Age Requirements for EITC Recipients with No Qualifying Children

If a tax filer has no qualifying children, he or she must be between 25 and 64 years of age to be eligible for the EITC. There is no age requirement for tax filers with qualifying children.

Investment Income

A tax filer with investment income over a certain dollar amount is ineligible for the EITC. The statutory limit—$2,200—is adjusted annually for inflation. For 20152017, the limit on investment income is $3,400450. Investment income is defined as interest income (including tax-exempt interest), dividends, net rent, net capital gains, and net passive income. It also includes royalties that are from sources other than the filer's ordinary business activities.

Disallowance of the EITC Due to Fraud or Reckless Disregard of Rules

A tax filer is barred from claiming the EITC for a period of 10 years after the IRS makes a final determination to reduce or disallow a tax filer's EITC because that individual made a fraudulent EITC claim. A tax filer is barred from claiming the EITC for a period of two years after the IRS determines that the individual made an EITC claim "due to reckless and intentional disregard of the rules" of the EITC, but that disregard was not found to be fraud.13

Calculating the EITC

The EITC amount is based on formulas that consider earned income, number of qualifying children, marital status, and adjusted gross income (AGI). In general, the EITC equals a fixed percentage (the "credit rate") of earned income until the credit reaches itits maximum amount. The EITC then remains at its maximum level over a subsequent range of earned income, between the "earned income amount" and the "phase-out amount threshold." Finally, the credit gradually decreases in value to zero at a fixed rate (the "phase-out rate") for each additional dollar of earnings or AGI (whichever is greater) above the phase-out amount threshold. The specific values of these EITC parameters (e.g., credit rate, earned income amount, etc.) vary depending on several factors, including the number of qualifying children a tax filer has and his or her marital status, as illustrated in Table 1.

Table 1. EITC Tax Parameters by Marital Status
and Number of Qualifying Children for 2015

2017

Number of Qualifying Children

0

1

2

3 or more

unmarried tax filers (single and head of household filers)

credit rate

7.65%

34%

40%

45%

earned income amount

$6,580

670

$9,880

10,000

$13,870

14,040

$13,870

14,040

maximum credit amount

$503

510

$3,359

400

$5,548

616

$6,242

318

phase-out amount threshold

$8,240

340

$18,110

340

$18,110

340

$18,110

340

phase-out rate

7.65%

15.98%

21.06%

21.06%

income where credit = 0

$14,820

15,010

$39,131

617

$44,454

45,007

$47,747

48,340

married tax filers (married filing jointly)

credit rate

7.65%

34%

40%

45%

earned income amount

$6,580

670

$9,880

10,000

$13,870

14,040

$13,870

14,040

maximum credit amount

$503

510

$3,359

400

$5,548

616

$6,242

318

phase-out amount threshold

$13,750

930

$23,630

930

$23,630

930

$23,630

930

phase-out rate

7.65%

15.98%

21.06%

21.06%

income where credit = 0

$20,330

600

$44,651

45,207

$49,974

50,597

$53,267

930

Source: IRS Revenue Procedure 2014-612016-55 and Internal Revenue Code (IRC) Section 32.

As illustrated in Table 1, the EITC's earned income amounts, credit rates, phase-out rates, and maximum credit amounts vary by the number of qualifying children a tax filer has. The EITC ranges from a maximum credit of $503510 for a tax filer without a child to $6,242318 for a tax filer with three or more qualifying children, as illustrated in Figure 1.

Figure 1. Maximum EITC by Number of Qualifying Children: 2015

2017

Source: Congressional Research Service based on IRS Revenue Procedure 2014-612016-55 and Internal Revenue Code (IRC) Section 32

.

The phase-out amount threshold varies by both the number of qualifying children a tax filer has and his or her marital status. The phase-out amount threshold for those who are married filing joint returns is $5,520590 greater than for unmarried filing statuses with the same number of children. (Tax filers who file as married filing separately are ineligible for the EITC.) This higher phase-out amount threshold for married tax filers reduces (but generally does not eliminate) potential "marriage penalties" in the EITC whereby the credit for a married couple is less than the combined credit of two unmarried recipients.

Figure 2 illustrates the EITC amount by earnings level for an unmarried taxpayer with one child for 20152017. It shows the three distinct ranges of EITC for this family:

  • Phase-in Range: The EITC increases with earnings from the first dollar of earnings up to earnings of $9,88010,000. Over this earnings range, the credit equals the credit rate (34% for a tax filer with one child) times the amount of annual earnings. The $9,88010,000 threshold is called the earned income amount and is the earnings level at which the EITC ceases to increase with earned income. The income interval up to the earned income amount, where the EITC increases with earnings, is known as the phase-in range.
  • Plateau: The EITC remains at its maximum level of $3,359400 from the earned income amount ($9,880)10,000 until earnings exceed $18,1100340). The $3,359400 credit represents the maximum credit for a tax filer with one child in 20152017. The income interval with the EITC fixed at its maximum value represents the plateau on Figure 2.
  • Phase-out Range: Once earnings exceed $18,110340, the EITC is reduced for every additional dollar over that amount. The $18,110340 threshold is known as the phase-out amount threshold for a single taxpayer with one child in 20152017. For each dollar over the phase-out amount threshold, the EITC is reduced by 15.98%. The 15.98% rate is known as the phase-out rate. The income interval from the phase-out income level until the EITC is completely phased out is known as the phase-out range.

The EITC is completely phased out (EITC = $0) once the tax filer's AGI (or earned income, whichever is greater) reaches $39,131617. The earned income amounts and the phase-out amount thresholds are adjusted each year for inflation.

Figure 2. Amount of the EITC for an Unmarried Tax Filer with One Child, 2015

2017

Source: Congressional Research Service, based on information in IRS Revenue Procedure 2014-612016-55 and Internal Revenue Code Section 32

.

In practice, EITC claimants use tables published by the IRS to calculate their credit amount. A tax filer can look up the correct amount of his or her EITC based on income, marital status, and number of qualifying children. The instructions for the federal income tax form14 show the EITC amounts in tables by income brackets (in $50 increments).

Income Limits for the EITC

As previously discussed, the amount of the EITC is reduced for each dollar of AGI (or earnings, if greater) above a certain dollar threshold, referred to as the phase-out amount threshold. That threshold, combined with the phase-out rate, results in a specific income level (referred to as "income where credit = 0" in Table 1) above which a tax filer is ineligible for the credit. This income level, where the credit reaches zero, is sometimes referred to as the eligibility threshold.

As illustrated in Table 1, there are eight eligibility thresholds for the EITC depending on the number of qualifying children a taxpayer has and his or her marital status. The eligibility thresholds vary every year given that they are based in part on a parameter of the credit—the phase-out amount threshold—that is explicitly adjusted for inflation. Table 2 shows the EITC eligibility thresholds for 20152017. An EITC claimant's AGI (or earnings, if higher) must be below these thresholds for the claimant to qualify for the EITC. In 20152017, these thresholds range from $14,82015,010 for an unmarried tax filer with no qualifying child to $53,267930 for a married tax filer filing jointly with three or more qualified children.

Table 2 expresses these eligibility thresholds as a percentage of the 20152017 poverty guidelines. For example, the poverty guideline for a family of four in 2015 was $24,250three in 2016 was $20,420. Families of fourthree with income at or below this amount are considered poor. The EITC eligibility threshold of $49,974 for a married couple45,007 for an unmarried person filing jointly with two qualifying children was more than twice (206.1 220.4%) the poverty guideline for a family of that type.

Table 2 also expresses these eligibility thresholds as a percentage of the earnings of one worker who works a minimum wage job ($7.25 per hour) 40 hours per week, 52 weeks a year ($15,080 annually). For the purposes of the calculations in Table 2, married EITC recipients are assumed to have the same aggregate annual earnings as unmarried recipients—$15,080. The EITC wasis available in 20152017 to all families at this earnings level except an unmarried taxpayer with no children. The EITC was available to families with children who had earnings between 2.56 to 3.56 times the annual earnings from a minimum wage job (259.5% to 353.2262.7% to 357.6% of $15,080).

Table 2. Maximum AGI to Qualify for the EITC, by Number of Qualifying Children and Filing Status in 2015

2017
 

 

No Qualifying Children

One Qualifying Child

Two Qualifying Children

Three or More Qualifying Children

In dollars

Unmarried

Unmarried

$14,820

15,010

$39,131

617

$44,454

45,007

$47,747

48,340

Married Filing Jointly

$20,330

20,600

$44,651

45,207

$49,974

50,597

$53,267

53,930

As a percentagepercentage of the poverty threshold

Unmarried

125.9124.5%

245.6243.9%

221.3220.4%

196.95%a

Married Filing Jointly

127.6%

126.8

222.3%

221.4

206.1%

205.7

187.5%4b

As a percentage of work at the federal minimum wage, 40 hours per week, 52 weeks per year

percentage of work at the federal minimum wage, 40 hours per week, 52 weeks per year

Unmarried

98.399.5%

259.5262.7%

294.8298.5%

316320.6%

Married Filing Jointly

134.8%

136.6

296.1%

299.8

331.4%

335.5

353.2%

357.6

Source: Congressional Research Service calculations based on IRS Revenue Procedure 2014-612016-55, Internal Revenue Code (IRC) Section 32 and the 20152017 Poverty Guidelines available at https://aspe.hhs.gov/2015-poverty-guidelines#guidelines.

.

a. Represents the EITC AGI threshold divided by the poverty guidelines for a family of 4.

b. Represents the EITC AGI threshold divided by the poverty guidelines for a family of 5.

Payment of the EITC

The EITC is provided to individuals and families annually in a lump sum payment after a taxpayer files a federal income tax return.15 It may be received in one of three ways:

  • 1. a reduction in federal tax liability;
  • 2. a cash payment from the Treasury if the tax filer has no tax liability, through a tax refund check; or
  • 3. a combination of reduced federal tax liability and a refund.

The majority (8786%) of the aggregate amount of the EITC—$68.13 billion in 2013for 2014—is received as a refund.16 In other words, $59.158.9 billion of the EITC was received as a refund in 2013for 2014, while approximately $8.99.5 billion offset tax liabilities.

The EITC is taken against all taxes reported17 on the federal individual income tax return (Form 1040) after all nonrefundable credits have been taken. On the tax form, the EITC can be found in the payments section after the lines for withholding and estimated tax payments.

The EITC benefits families when they file their income taxes. Thus, payments are generally based on the prior year's income, earnings, and family composition. That is, the EITC paid in 2016 is generally based on earnings, income, and family composition in 2015.

earned in 2017, based on a tax filer's earnings, income, and family composition, will be paid in 2018.18 If the tax filer is owed a refund, and that filer's return includes an EITC, that refund will be made on or after February 15.19

Interaction with Other Tax Provisions

On the tax return, the EITC is calculated after total tax liability and all nonrefundable credits. Nonrefundable tax credits, which are taken against (reduce) income tax liability, include credits for education, dependent care, savings, and the nonrefundable portion of the child credit.1820 If an EITC-eligible family has a tax liability and can use one or more of these credits, the total amount of their EITC will remain unchanged, but how they receive the credit will change. If nonrefundable tax credits can reduce a family's tax liability, a greater amount of their EITC will be received as a refund, and less will offset their tax liability since their tax liability is smaller.

For tax filers whose income places them in the "phase-out range" of the credit, reducing their income (all else being unchanged) will result in a larger EITC. (As illustrated in Figure 2, reducing income when a tax filer is in the phase-out range results in the tax filer increasing the amount of the credit they receive.) A variety of forms of income can be excluded from both AGI and earned income, reducing a taxpayer's AGI or earned income for purposes of calculating the credit. For example, pre-taxpretax contributions to savings accounts for retirement or medical expenses are not included in either AGI or earned income. Hence, by making these contributions, EITC claimants whose pre-contributionprecontribution income places them in the phase-out range of the credit will reduce their AGI or earned income for purposes of calculating the EITC and thus receive a larger credit.1921 

In contrast, for tax filers whose income places them in the "phase-in range" of the credit, reducing their income (all else unchanged) will result in a smaller EITC. (As illustrated in Figure 2, reducing income when a tax filer is in the phase-in range results in the tax filer reducing the amount of the credit they receive.) Generally, non-taxablenontaxable income cannot be included in earned income for purposes of calculating the EITC. However, as previously discussed, service membersservicemembers may elect to include their nontaxable combat pay as earnings, for purposes of calculating the EITC. Generally, service membersservicemembers whose income (excluding their combat- pay) places them in the phase-in range will elect to include their combat pay in earned income for purposes of calculating the EITC in order to receive a larger credit.

Treatment of the EITC for Need-Tested Benefit Programs

By law,2022 the EITC cannot be counted as income in determining eligibility for, or the amount of, any federally funded public benefit program including Supplemental Nutrition Assistance Program (SNAP) food assistance, low-income housing, Medicaid, Supplemental Security Income (SSI), and Temporary Assistance for Needy Families (TANF). An EITC refund that is saved by the filer does not count against the resource limits of any federally funded public benefit program for 12 months after the refund is received.

Modifications to the EITC Made Permanent by
P.L. 114-113

Two temporary modifications to the EITC were enacted by the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). First, ARRA enacted a temporary larger credit for families with three or more children by creating a new higher credit rate of 45% (previously, these tax filers were eligible for a credit rate of 40%). Second, ARRA expanded marriage penalty relief by increasing the earnings level at which the credit phased out for married tax filers in comparison to unmarried tax filers with the same number of children. Before ARRA, the EITC for married tax filers would begin to phase out for earnings $3,000 (adjusted for inflation) greater than the level for unmarried recipients with the same number of children. ARRA increased this differential to $5,000 (adjusted for inflation). In 20152017, this marriage penalty relief was equal to $5,520.590. These two changes were originally scheduled to be in effect only for 2009 and 2010. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) extended these ARRA provisions for two years (2011 and 2012). The American Taxpayer Relief Act (ATRA; P.L. 112-240) extended the ARRA provisions for five more years (2013-2017). The Protecting Americans from Tax Hikes (PATH) Act (Division Q of P.L. 114-113) made these two modifications permanent.

Participation and Benefits

The EITC was first enacted in 1975 as a temporary measure meant to encourage economic growth in the face of the 1974 recession and rising food and energy prices. It was also originally intended to "assist in encouraging people to obtain employment, reducing the unemployment rate, and reducing the welfare rolls."2123 Over time the list of EITC objectives has grown to include poverty reduction. Today the EITC is the largest need-tested, cash benefit anti-povertyantipoverty program. This section first provides a historical overview of the growth of the EITC fromfor tax years 1975 to 20132014; it then examines information on EITC participation for 20132014.

Trends in Participation and EITC Benefits

When originally enacted by the Tax Reduction Act of 1975 (P.L. 94-12), the EITC was a temporary refundable tax credit in effect for 1975. For that year, 6.2 million tax filers claimed the EITC and the total EITC amount claimed was $1.25 billion (in constant 20132014 dollars, this equals $5.45 billion). The credit was extended several more times on a temporary basis and made permanent by the Revenue Act of 1978 (P.L. 95-600). Legislation enacted in 1986 (P.L. 99-514), 1990 (P.L. 101-508), 1993 (P.L. 103-66), 2001 (P.L. 107-16), and 2009 (P.L. 111-5) increased the amount of the credit by changing the credit formula.

Before 1990, the credit amount was calculated as a percentage of earnings ("the credit rate") up until the earned income amount. The credit then remained at its maximum level before gradually decreasing in value as earnings increased. Legislative changes to the credit made during this time generally increased the amount of the credit in a variety of ways including increasing the credit rate, increasing the earned income amount, increasing the phase-out amount threshold, and decreasing the phase-out rate. Nonetheless, the credit amount depended on earned income.

Beginning in 1990 and more substantially in 1993, the credit formula was revised such that the credit amount varied based on earnings and, to a certain extent, the number of qualifying children. This essentially increased the credit by family size. In addition, for the first time in 1993, Congress made workers without qualifying children eligible for the EITC, although the credit was smaller than the credit for claimants with qualifying children.

In 2001, the credit formula was revised again so that it also varied based in part on marital status. As a result of this change, often referred to as "marriage penalty relief," certain married tax filers would receive a larger credit than unmarried tax filers with the same number of children. In 2009, the marriage penalty relief was expanded further and a larger credit was created for families with three or more children. These 2009 changes were extended several times and made permanent by P.L. 114-113.

Figure 3 shows the number of tax filers claiming the EITC fromfor 1975 to 20132014. Figure 4 shows the amount of the EITC claimed on these returns, with dollar amounts adjusted for inflation to represent 20132014 dollars. The figures show the effects of the legislative expansions of the EITC, with the credit experiencing growth in the late 1980s through the mid-1990s and then again in the 2000s. As shown on Figure 4, throughout the history of the EITC, most credits have been paid in the form of refunds, with a relatively small share of the EITC reducing regular federal income tax liability.

Figure 3. Number of Tax Filers Claiming the EITC: 1975 to 2013

2014

Source: Congressional Research Service. For pre-2003 data, U.S. Congress, House Committee on Ways and Means, 2004 Green Book, Background Material and Data on Programs Within the Jurisdiction of the Committee on Ways and Means, 108th Congress, 2nd session, WMCP 108-6, March 2004, pp. 13-41. For 2003 and later data, Internal Revenue Service, Total File, United States, Individual Income and Tax Data, by State and Size of Adjusted Gross Income, 2003 through 20134, expanded unpublished version, Table 2.5.

Note: For a tabular display of this information, see Table A-1.

Figure 4. EITC Claimed on Federal Income Tax Returns: 1975-2013

2014

Source: Congressional Research Service. For pre-2003 data, U.S. Congress, House Committee on Ways and Means, 2004 Green Book, Background Material and Data on Programs Within the Jurisdiction of the Committee on Ways and Means, 108th Congress, 2nd session, WMCP 108-6, March 2004, pp. 13-41. For 2003 and later data, Internal Revenue Service, Total File, United States, Individual Income and Tax Data, by State and Size of Adjusted Gross Income, 2003 through 20134, expanded unpublished version, Table 2.5.

Notes: Constant 20132014 dollars were computed using the Consumer Price Index for all Urban Consumers (CPI-U). For a tabular display of this information, see Table A-1.

The growth in the total amount of EITC claimed in the late 1980s to the mid-1990s was due to increases not onlynot only increases in participation, but also in the average credit received by tax filers. Figure 5 shows the average EITC claimed for 1975 to 20132014, in inflation-adjusted (20132014) dollars. Before the 1986 Tax Reform Act (P.L. 99-514), EITC thresholds were not indexed for inflation, and the average credit lost value each year. However, the 1986 act increased the monetary parameters of the credit for prior inflation and adjusted the threshold amounts and maximum credits annually for inflation in future years. The credit formula was also revised in 1990 and then again in 1993 such that the amount of the credit depended to a certain extent on family size. These changes resulted in an increasing average credit between the late 1980s and late 1990s. Since then, the average credit has largely maintained its real value. However, increases in the average credit amount in 2001 and 2009 were likely due to legislative changes that included larger credits for some married claimants and for families with three or more children.22

24 The average EITC claimed for 2014 was $2,395.

Figure 5. Average EITC Claimed: 1975 to 2013

2014

Source: Congressional Research Service. For pre-2003 data, U.S. Congress, House Committee on Ways and Means, 2004 Green Book, Background Material and Data on Programs Within the Jurisdiction of the Committee on Ways and Means, 108th Congress, 2nd session, WMCP 108-6, March 2004, pp. 13-41. For 2003 and later data, Internal Revenue Service, Total File, United States, Individual Income and Tax Data, by State and Size of Adjusted Gross Income, 2003 through 20134, expanded unpublished version, Table 2.5.

Notes: Constant 20132014 dollars were computed using the Consumer Price Index for all Urban Consumers (CPI-U). For a tabular display of this information, see Table A-1.

Participation and EITC Amounts Claimed for 2013

2014

For 20132014, $68.13 billion of the EITC was claimed on 28.85 million tax returns.

Number of Qualifying Children

Most tax filers claiming the EITC, and those who received the most EITC dollars, were families with children. Figure 6 shows total EITC dollars claimed for 20132014 by number of qualifying children. For 20132014, 3% of all EITC dollars were claimed by tax filers with no qualifying children and 97% were claimed by tax filers with qualifying children. Of this 97%, 36% were claimed by tax filers with one qualifying child, 40% were claimed by tax filers with two qualifying children, and 21% were claimed by tax filers with three or more qualifying children.

Figure 6. Total EITC Dollars Claimed for 20132014, by Number of Qualifying Children

Dollars in Billions, Total EITC Claimed = $68.13 Billion

Source: Congressional Research Service, based on data from the U.S. Department of Treasury, Internal Revenue Service, SOI Tax Stats - Individual Income Tax Returns Publication 1304, Table 2.5.

Though childless tax filers claimed 3% of all EITC dollars for 20132014, they accounted for close to one-fourth26% of all tax filers that claimed the EITC. Thus, their small share of total EITC dollars reflects, in part, the lower credit amount available to childless filers.

Figure 7 shows the number of returns claiming the EITC for 20132014 by number of qualifying children. Figure 8 shows the average EITC claimed for 20132014 by number of qualifying children, with the overall average amount of the EITC claimed being $2,362. The average EITC for 20132014 increased with the number of qualifying children a tax filer claimed:

  • The EITC was claimed by 7.34 million tax filers with no qualifying children, with an average claim of $280287.
  • The EITC was claimed by 10.75 million filers with one qualifying child, with an average claim of $2,326381.
  • The EITC was claimed by 7.42 million filers with two qualifying children, with an average claim of $3,667754.
  • The EITC was claimed by 3.54 million filers with three or more qualifying children, with an average claim of $4,022107.

Figure 7. Number of Tax Returns with EITC Claims for 20132014,
by Number of Qualifying Children

Number in Millions, Total Number of Returns Claiming the EITC = 28.85 million

Source: Congressional Research Service, based on data from the U.S. Department of Treasury, Internal Revenue Services, SOI Tax Stats - Individual Income Tax Returns Publication 1304, Table 2.5.

Notes: Detail does not add to total because of rounding. For detail on returns claiming the EITC by AGI and number of qualifying children, see Table A-2.

Figure 8. Average EITC Claimed by Tax Filers in 2013,2014
by Number of Qualifying Children

Source: Congressional Research Service, based on data from the U.S. Department of Treasury, Internal Revenue Services, SOI Tax Stats - Individual Income Tax Returns Publication 1304, Table 2.5.

Note: For detail on returns claiming the EITC by AGI and number of qualifying children, see Table A-2.

Income Level

Though the EITC is targeted toward lower-income earners, tax filers with children may receive the EITC even with income well above the poverty level. (The federal poverty level for a family of three was $19,530 in 201320,420 in 2014.) However, the largest EITC benefits are focused on low-income earners near the poverty line, with those with greater earnings receiving reduced benefits.

Figure 9 shows the number of tax returns with EITC claims in 2013for 2014 by adjusted gross income level. Figure 9 shows that the most typical (modal) EITC tax return had an AGI between $10,000 and $14,999, with 6.23 million returns including an EITC in that income range for 20132014. For that year, close to half of all returns with EITC claims had AGIs below $15,000. This AGI is equivalent to earnings less than the $15,080 earned by a full-time (40 hour per week) full-year (52 weeks per year) worker earning the federal minimum wage ($7.25 per hour).

Figure 9 also shows the average EITC claimed by AGI category. Average EITC benefits first increase with AGI, then decline. This outcome reflects the formula for determining the EITC, which provides an increasing credit up to a maximum amount, then ultimately a reduced credit as it is phased out above a certain income threshold (see Table 1 and Figure 2). It also reflects a difference in the mix of family types claiming the EITC in the various AGI categories. For example, 7071% of all filers claiming the EITC with AGIs of less than $5,000 had no qualifying children. All those claiming the EITC at AGIs above $20,000 in 20132014 had qualifying children, and hence were eligible for a larger maximum EITC benefit than filers without children. For detail on returns claiming the EITC by AGI and number of qualifying children, see Table A-2.

Figure 9. Number of Returns Claiming the EITC and Average EITC Claimed for 20132014, by Adjusted Gross Income

Numbers in Millions and 20132014 Dollars

Source: Congressional Research Service, based on data from the U.S. Department of Treasury, Internal Revenue Services, SOI Tax Stats - Individual Income Tax Returns Publication 1304, Table 2.5.

Notes: For detail on returns claiming the EITC by AGI and number of qualifying children, see Table A-2.

Filing and Marital Status

The Internal Revenue Service does not provide data on EITC dollars claimed by filing status. The Tax Policy Center (TPC), however, projects that in 2015, 70% of all EITC dollars will be claimed by unmarried tax filers (head of household and single filing statuses), with most (60% of all EITC dollars) claimed by those filing as heads of household. (The TPC projections are likely similar to the actual amounts of the EITC claimed by filing status in 2013 and 2014, given that they are based on the same credit formula.) Figure 10 shows projections for EITC dollars claimed by filing status for 2015.

Figure 10. Estimate of EITC Dollars Claimed by Marital Status, 2015

Dollars in Billions

Source: Congressional Research Service, based on estimates from the Urban-Brookings Institution Tax Policy Center Table T13-0274, available at http://www.taxpolicycenter.org/numbers/index.cfm. Estimates are for tax year 2015.

Region

In 2013For tax year 2014, the EITC was claimed on 19.41% of all tax returns. However, the rate at which the EITC is claimed by tax filers varies considerably by state. In 20132014, the state with the highest percentage of returns claiming the EITC was Mississippi, with the credit claimed on 32.41% of all returns. In contrast, the EITC was claimed on 12.311.9% of all returns in New Hampshire that year.

Figure 11 provides a map showing the percentage of all tax returns claiming the EITC by state. In addition to considerable state variation, the map shows that there is a regional pattern to EITC receipt. A greater share of returns filed in certain southern states claimed the EITC than returns in other regions of the country. The EITC was claimed on the smallest percentage of returns in New England as well as some states in the northern Midwest.

Figure 11. Percentage of Tax Returns Claiming the EITC by State, 2013

for 2014

Source: Congressional Research Service, based on data from the U.S. Internal Revenue Service.

NoteNotes: For detail on EITC returns by state, see Table A-3.

Appendix. Additional Tables

Table A-1. EITC Tax Filers and Dollars Claimed: 1975-2013

2014

68,339

68,084

2,395

 

 

In Millions of Nominal $

Nominal $

millions of nominal dollars

In Millions of Constant 2013 $

Constant 2013 $

millions of constant 2014 dollars

Year

Tax Filers Claiming the EITC (Millions)

Total EITC

Refunded EITC

Average EITC

Total EITC

Refunded EITC

Average EITC

1975

6.215

$1,250

$900

$201

$5,413

5,500

$3,897

3,960

$870

884

1976

6.473

1,295

890

200

5,302

388

3,644

703

819

832

1977

5.627

1,127

880

200

4,332

403

3,383

438

769

781

1978

5.192

1,048

801

202

3,744

805

2,862

908

722

733

1979

7.135

2,052

1,395

288

6,584

691

4,476

549

924

939

1980

6.954

1,986

1,370

286

5,615

706

3,873

936

809

822

1981

6.717

1,912

1,278

285

4,900

980

3,275

328

730

742

1982

6.395

1,775

1,222

278

4,285

354

2,950

998

671

682

1983

7.368

1,795

1,289

244

4,198

266

3,015

064

571

580

1984

6.376

1,638

1,162

257

3,673

732

2,605

648

576

586

1985

7.432

2,088

1,499

281

4,521

594

3,245

298

608

618

1986

7.156

2,009

1,479

281

4,270

339

3,144

195

597

607

1987

8.738

3,391

2,930

388

6,954

7,067

6,008

106

796

809

1988

11.148

5,896

4,257

529

11,610

799

8,383

519

1,042

059

1989

11.696

6,595

4,636

564

12,390

591

8,710

851

1,060

077

1990

12.542

7,542

5,266

601

13,443

661

9,386

538

1,071

089

1991

13.665

11,105

8,183

813

18,994

19,302

13,996

14,223

1,391

413

1992

14.097

13,028

9,959

924

21,632

983

16,536

804

1,534

559

1993

15.117

15,537

12,028

1,028

25,048

454

19,391

706

1,657

684

1994

19.017

21,105

16,598

1,110

33,175

713

26,091

514

1,745

773

1995

19.334

25,956

20,829

1,343

39,676

40,320

31,839

32,355

2,053

086

1996

19.464

28,825

23,157

1,481

42,798

43,492

34,382

940

2,199

235

1997

19.391

30,389

24,396

1,567

44,108

823

35,409

984

2,274

311

1998

20.273

32,340

27,175

1,595

46,220

970

38,838

39,468

2,280

317

1999

19.259

31,901

27,604

1,656

44,607

45,331

38,599

39,225

2,316

353

2000

19.277

32,296

27,803

1,675

43,691

44,400

37,613

38,223

2,266

303

2001

19.593

35,784

29,043

1,826

47,070

834

38,203

823

2,402

441

2002

21.574

37,786

33,258

1,751

48,930

49,724

43,067

765

2,267

304

2003

22.112

39,186

34,508

1,772

49,612

50,417

43,690

44,398

2,243

280

2004

22.270

40,024

35,299

1,797

49,359

50,159

43,532

44,238

2,216

252

2005

22.752

42,410

37,465

1,864

50,587

51,408

44,689

45,414

2,223

259

2006

23.042

44,388

39,072

1,926

51,292

52,124

45,149

882

2,226

262

2007

24.584

48,540

42,508

1,974

54,537

55,421

47,759

48,534

2,218

254

2008

24.756

50,669

44,260

2,047

54,824

55,713

47,889

48,666

2,215

251

2009

27.041

59,240

53,985

2,191

64,326

65,370

58,620

59,571

2,379

418

2010

27.368

59,562

54,256

2,176

63,632

64,664

57,964

58,904

2,325

362

2011

27.912

62,906

55,350

2,254

65,148

66,205

57,323

58,253

2,334

372

2012

27.848

64,129

56,190

2,303

65,068

66,124

57,013

938

2,337

375

2013

28.822

68,084

59,145

2,362

69,189

60,104

2,400

2014

28.538

59,145

58,889

2,362

395

68,339

58,889

Source: Congressional Research Service. For pre-2003 data, U.S. Congress, House Committee on Ways and Means, 2004 Green Book, Background Material and Data on Programs Within the Jurisdiction of the Committee on Ways and Means, 108th Congress, 2nd session, WMCP 108-6, March 2004, pp. 13-41. For 2003 and later data, Internal Revenue Service, Total File, United States, Individual Income and Tax Data, by State and Size of Adjusted Gross Income, 2003 through 20134, expanded unpublished version, Table 2.5.

Note: Constant 20132014 dollars were computed using the Consumer Price Index for all Urban Consumers (CPI-U).

Table A-2. Average EITC, Number of Returns with EITC Claimed, and Total EITC Benefits for 20132014, by Adjusted Gross Income

         

AGI

Totals

No Qualifying Children

One Qualifying Child

Two Qualifying Children

Three or More Qualifying Children

Average Credit

         

Less than $5,000

$546

540

$218

215

$1,177

162

$1,495

562

$1,747

810

$5,000 to $9,999

1,596

558

413

427

2,761

787

3,095

072

3,418

503

$10,000 to $14,999

2,688

660

195

202

3,156

254

4,976

5,028

5,509

648

$15,000 to $19,999

3,978

4,048

166

183

3,103

199

5,194

315

5,863

985

$20,000 to $24,999

3,623

753

0

2,532

644

4,561

687

5,278

501

$25,000 to $29,999

2,834

943

0

1,807

934

3,606

731

4,422

551

$30,000 to $34,999

1,964

2,088

0

1,054

157

2,583

728

3,399

549

$35,000 to $39,999

1,385

446

0

519

565

1,637

821

2,485

611

$40,000 to $44,999

966

1,047

0

276

323

841

925

1,473

694

$45,000 and higher

512

584

0

0

338

418

641

717

Totals

 

2,362

395

280

287

2,326

381

3,667

754

4,022

107

Total Returns with EITC

Less than $5,000

2,838,242

678,792

1,994,616

901,415

537,854

491,682

208,717

201,590

97,051

84,107

$5,000 to $9,999

5,129,061

4,980,767

2,673,452

708,132

1,738,302

600,850

514,983

487,921

202,326

183,865

$10,000 to $14,999

6,158,600

293,185

2,274,241

452,653

1,917,814

915,924

1,449,088

391,897

517,456

532,710

$15,000 to $19,999

4,008,364

3,871,549

313,299

321,082

1,772,571

712,112

1,314,389

291,965

608,103

546,390

$20,000 to $24,999

2,995,525

3,008,698

0

1,553,798

646

967,181

1,000,063

474,546

453,989

$25,000 to $29,999

2,630,904

454,246

0

1,326,461

253,596

870,705

811,158

433,738

389,492

$30,000 to $34,999

2,190,128

203,407

0

1,062,331

078,788

797,465

777,014

330,332

347,605

$35,000 to $39,999

1,544,531

609,000

0

598,800

692,988

614,961

577,388

330,770

338,624

$40,000 to $44,999

918,194

945,503

0

151,060

191,427

450,198

454,086

316,937

299,990

$45,000 and higher

408,239

492,762

0

0

174,039

220,167

234,199

272,595

Totals

 

28,821,788

537,909

7,255,608

384,282

10,658,991

491,013

7,361,726

213,249

3,545,458

449,367

Total EITC Claimed ($ in thousandsThousands)         )

Less than $5,000

$1,548,386

1,447,759

$433,884

409,156

$632,848

571,509

$312,078

314,839

$169,575

152,256

$5,000 to $9,999

8,188,503

7,760,435

1,104,096

156,586

4,799,295

460,893

1,593,622

498,859

691,490

644,096

$10,000 to $14,999

16,557,395

736,984

443,096

496,528

6,053,350

233,653

7,210,511

6,997,885

2,850,436

3,008,917

$15,000 to $19,999

15,945,522

672,521

51,908

58,671

5,501,155

477,335

6,827,341

866,382

3,565,117

270,132

$20,000 to $24,999

10,851,382

11,291,513

0

1

3,934,984

4,107,069

4,411,631

687,078

2,504,766

497,366

$25,000 to $29,999

7,454,750

223,624

0

2,397,023

424,338

3,139,611

026,636

1,918,116

772,650

$30,000 to $34,999

4,302,376

601,608

0

1,119,570

248,334

2,060,017

119,707

1,122,789

233,567

$35,000 to $39,999

2,139,568

327,289

0

310,784

391,534

1,006,726

051,649

822,058

884,106

$40,000 to $44,999

887,310

989,895

0

41,671

61,764

378,710

420,006

466,929

508,126

$45,000 and higher

208,895

287,554

0

0

58,834

91,987

150,061

195,567

Totals

 

68,084,087

339,182

2,032,984

120,942

24,790,680

976,429

26,999,081

27,075,028

14,261,337

166,783

Source: Congressional Research Service, based on data from the U.S. Department of the Treasury, Internal Revenue Services, SOI Tax Stats - Individual Income Tax Returns Publication 1304, Table 2.5.

Table A-3. Total EITC Returns and Amounts for 20132014, by State

State or Area

Total Returns

Returns with EITC Claimed

Percentage of Total Returns with EITC Claimed

Total EITC Claimed
($ in thousands(In thousands $)

Average EITC

PercentagePercent of EITC Refunded

U.S. Totala

United States total

146,542,500

147,766,770

28,487,090

233,280

19.41%

$67,276,706

720,175

$2,362

399

86.94%

Alabama

2,048,730

046,560

536,120

529,020

26.2

25.8

1,437,905

444,910

2,682

731

89.4

0

Alaska

359,140

361,130

51,800

48,620

14.4

13.5

103,910

98,599

2,006

028

89.6

88.9

Arizona

Arkansas

2,813,630

1,223,140

600,340

310,300

21.3

25.4

1,489,323

794,507

2,481

560

88.3

4

Arkansas

Arizona

1,220,230

2,845,710

314,740

603,080

25.8

21.2

789,317

1,522,532

2,508

525

89.1

87.6

California

17,171,740

411,400

3,314,700

312,640

19.3

0

7,670,273

748,313

2,314

339

83.7

2

Colorado

2,502,950

553,250

382,850

377,440

15.3

14.8

813,304

810,024

2,124

146

86.8

1

Connecticut

1,749,600

470

232,190

231,640

13.3

2

489,158

497,420

2,107

147

87.0

86.5

Delaware

439,680

443,820

76,590

77,250

17.4

174,099

178,189

2,273

307

90.7

3

District of Columbia

331,050

336,950

56,650

590

17.1

16.8

128,373

129,888

2,266

295

86.5

8

Florida

9,316,270

398,920

2,234,430

218,780

24.0

23.6

5,352,624

404,377

2,396

436

85.6

84.7

Georgia

4,358,720

378,120

1,148,030

138,570

26.3

0

3,029,086

063,653

2,639

691

87.1

86.4

Hawaii

675,280

681,840

116,110

114,020

17.2

16.7

247,426

246,619

2,131

163

89.5

0

Idaho

691,620

701,990

141,990

139,650

20.5

19.9

319,091

317,425

2,247

273

88.3

87.2

Illinois

6,100,680

131,110

1,059,290

055,660

17.4

2

2,539,201

582,429

2,397

446

85.9

6

Indiana

3,047,720

078,750

575,650

571,260

18.9

6

1,334,191

348,571

2,318

361

89.2

88.6

Iowa

1,434,620

445,570

219,880

216,720

15.3

0

473,523

476,999

2,154

201

88.8

4

Kansas

1,325,720

336,440

223,440

221,190

16.9

6

507,574

511,361

2,272

312

89.8

3

Kentucky

1,886,170

891,820

423,320

418,880

22.4

1

980,404

986,209

2,316

354

88.5

2

Louisiana

2,004,320

007,830

541,040

533,130

27.0

26.6

1,454,045

461,088

2,688

741

88.7

1

Maine

635,870

638,280

107,120

106,820

16.8

7

214,425

217,211

2,002

033

86.0

85.4

Maryland

2,941,920

935,560

440,980

445,690

15.0

2

991,135

1,017,496

2,248

283

85.5

84.9

Massachusetts

3,301,030

343,720

426,950

427,330

12.9

8

860,908

873,980

2,016

045

87.6

3

Michigan

4,656,840

685,320

856,080

844,910

18.4

0

2,010,280

031,147

2,348

404

86.6

3

Minnesota

2,653,420

687,780

361,120

357,410

13.6

3

752,909

761,404

2,085

130

87.8

6

Mississippi

1,245,660

243,420

403,620

399,570

32.4

1

1,118,189

128,094

2,770

823

89.6

88.8

Missouri

2,743,080

767,370

542,720

535,370

19.8

3

1,267,252

266,203

2,335

365

89.1

88.6

Montana

487,640

492,010

85,180

83,200

17.5

16.9

175,065

172,795

2,055

077

87.9

3

Nebraska

880,090

889,100

141,670

139,700

16.1

15.7

317,396

319,361

2,240

286

89.2

88.6

Nevada

1,307,650

321,700

261260,620

20.0

19.7

606,040

622,817

2,316

390

87.7

4

New Hampshire

681,760

685,010

83,680

81,730

12.3

11.9

158,584

157,544

1,895

928

86.1

85.5

New Jersey

4,326,880

342,620

630,100

633,940

14.6

1,415,169

444,010

2,246

278

85.8

84.9

New Mexico

905,730

911,750

223,560

220,440

24.7

2

528,239

529,254

2,363

401

90.2

89.8

New York

9,442,850

523,840

1,859,000

857,050

19.7

5

4,225,984

273,027

2,273

301

84.3

83.9

North Carolina

4,335,840

380,810

972,700

974,660

22.4

2

2,349,522

382,346

2,415

444

88.4

87.7

North Dakota

361,850

370,570

44,830

180

12.4

11.9

90,880

91,023

2,027

060

88.9

3

Ohio

5,536,900

559,950

997,930

986,380

18.0

17.7

2,326,447

339,276

2,331

372

88.6

3

Oklahoma

1,630,700

639,860

355,050

348,000

21.8

2

853,987

551

2,405

453

88.6

87.8

Oregon

1,793,890

826,550

298,340

297,650

16.6

3

614,022

616,801

2,058

072

88.1

87.6

Pennsylvania

6,153,510

169,090

973,460

969,860

15.8

7

2,102,875

134,260

2,160

201

89.3

88.7

Rhode Island

517,840

521,890

88,210

070

17.0

16.9

196,572

197,398

2,228

241

88.2

87.8

South Carolina

2,106,060

124,300

514,460

513,350

24.4

2

1,266,079

282,656

2,461

499

89.3

88.6

South Dakota

412,660

410,920

69,090

64,620

1615.7

146,089

140,406

2,114

173

89.8

5

Tennessee

2,908,080

928,360

681,750

674,840

23.4

0

1,671,871

683,788

2,452

495

87.0

86.6

Texas

11,888,890

992,010

2,813,110

720,390

2322.7

7,314,092

188,558

2,600

642

86.2

85.3

Utah

1,196,460

221,670

206,900

204,370

17.3

16.7

473,565

471,171

2,289

305

88.9

1

Vermont

321,480

322,860

47,230

46,420

14.7

4

88,181

87,885

1,867

893

84.8

5

Virginia

3,834,990

871,680

640,210

641,360

16.7

6

1,440,634

457,910

2,250

273

88.2

87.5

Washington

3,293,100

342,750

473,950

466,800

14.4

0

997,181

994,273

2,104

130

88.5

0

West Virginia

784,420

782,960

162,160

161,330

20.7

6

355,150

357,972

2,190

219

90.9

6

Wisconsin

2,798,380

811,290

406,250

401,440

14.5

3

867,358

873,359

2,135

176

88.8

5

Wyoming

283,920

279,930

41,630

37,520

14.7

13.4

83,533

77,435

2,007

064

89.6

0

Other Areas

695,230

718,040

27,330

23,850

3.9

3

64,266

52,651

2,351

208

96.8

2

Source: Congressional Research Service, based on data from the U.S. Department of the Treasury, Internal Revenue Service (IRS), Individual Income and Tax Data, by State and Size of Adjusted Gross Income.

a. Note: Totals in this table differ slightly from total shown in Table A-2. While the figures in Table A-2 and Table A-3 are both based on data from the IRS, the data in Table A-3 includesinclude "substitutes for returns" in which the IRS constructs tax returns for certain non-filersnonfilers.

Author Contact Information

[author name scrubbed], Specialist in Social Policy ([email address scrubbed], [phone number scrubbed])
[author name scrubbed], AnalystSpecialist in Public Finance ([email address scrubbed], [phone number scrubbed])

Acknowledgments

The authors would like to thank Jeffrey Stupak, Research Assistant in the Government Finance and Taxation Section, for his assistance in updating this report and CRS graphics specialist Jamie Hutchinson for creating the original figures in this report.

Footnotes

Nonresident aliens may be eligible to claim the credit if they are married to a U.S. citizen or resident alien, make the election to be treated as a resident alien, and file a joint return. For more information on the tax treatment of nonresident aliens, see CRS Report RS21732, Federal Taxation of Aliens Working in the United States, by [author name scrubbed]; CRS Report R43840, Federal Income Taxes and Noncitizens: Frequently Asked Questions, by [author name scrubbed] and [author name scrubbed]Social Security Number or Individual Taxpayer Identification Number for Tax Credit? That is the Question, by [author name scrubbed], [author name scrubbed], and [author name scrubbed] and CRS Legal Sidebar WSLG723, They've Got Your Number: Who Can Get A Social Security Card, by [author name scrubbed].

20.
1.

A tax filer who is claimed as a dependent on another person's tax return is ineligible for the EITC.

2.

There is an additional filing status that may claim the EITC—"qualifying widow(er) with dependent child." Generally, tax filers may file their tax return as married filing jointly in the year their spouse died. A tax filer may be eligible to use qualifying widow(er) with dependent child as his or her filing status for two years following the year his or her spouse died. This filing status entitles the tax filer to use joint return tax rates and the highest standard deduction amount (if he or she does not itemize deductions). It does not entitle the tax filer to file a joint return. The tax filer calculates the EITC using the formula for other unmarried tax filing statuses (head of household and single). The eligibility rules for this filing status can be found on page 10 of IRS Publication 501, available at http://www.irs.gov/pub/irs-pdf/p501.pdf.

3.

The 20152016 version of this form can be found at https://www.irs.gov/pub/irs-pdf/f1040sei.pdf.

4.

For more information, see httphttps://www.irs.gov/Individuals/Special-EITC-Rulescredits-deductions/individuals/earned-income-tax-credit/special-eitc-rules.

5.

See Internal Revenue Code (IRC) §32(c)(1)(C) and http://www.irs.gov/Individuals/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers.

6.

For more information on Social Security numbers valid for work purposes, see CRS Legal Sidebar WSLG823, SSA, Social Security Number for Noncitizens, at https://www.socialsecurity.gov/pubs/EN-05-10096.pdf; CRS Report R43840, Federal Income Taxes and Noncitizens: Frequently Asked Questions, by [author name scrubbed] and [author name scrubbed]; CRS Report R44290, Legal Authority for Aliens to Claim Refundable Tax Credits: In Brief, by [author name scrubbed].

7.
7.

For more information, see CRS Report RS21732, Federal Taxation of Aliens Working in the United States, by [author name scrubbed] and http://www.irs.gov/Individuals/International-Taxpayers/Determining-Alien-Tax-Status. In addition, for the EITC, a nonresident alien may be eligible to claim the credit if they are married to a U.S. citizen or resident alien, make the election to be treated as a resident alien, and file a joint return.

8.

If an individual is the qualifying child for the purposes of the EITC of another person, that individual cannot themselves claim the EITC. For more information, see http://www.irs.gov/Individuals/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers.

9.

If placed by an authorized agency or court order.

10.

Qualifying children who reside with a service memberservicemember who is stationed outside the United States while serving on extended active duty with the U.S. Armed Forces are considered to reside in the United States for the purposes of the EITC.

11.

Currently, there is no Federal regulation which states that taxpayers with a qualifying child who do not claim that qualifying child for the EITC are ineligible for the credit. However, the website of the Internal Revenue Service does state that such individuals are ineligible for the childless EITC. For more information, see http://www.irs.gov/Individuals/Qualifying-Child-of-More-Than-One-Personhttps://www.irs.gov/credits-deductions/individuals/earned-income-tax-credit/qualifying-child-of-more-than-one-person.

12.

The tie-breaker rules are: (1) if both tax filers are parents of the child, the parent with whom the child resided the longest during the year claims the child for the EITC; (2) if the child resided with each parent for the same amount of time during the year, the parent with the highest adjusted gross income (AGI) claims the child for the EITC; (3) if only one tax filer is the parent of the child, the tax filer who is the parent claims the child for the EITC; and (4) if neither tax filer is the parent of the child, the tax filer with the highest AGI claims the child for the EITC.

13.

See IRC §32(k).

14.

The tables can be found, for 20152016 returns, beginning on page 62 of the Form 1040 general instructions, at https://www.irs.gov/pub/irs-pdf/i1040gi.pdf.

15.

Before 2011, any persons with a qualified child eligible for the EITC could elect to receive advance payment of the credit through the employer's payroll withholding system by filing an eligibility certificate (Form W-5) with his or her employer. The option was little used and eliminated by P.L. 111-226.

16.

For more information, see IRS Statistics of Income, Table 2.5 at http://www.irs.gov/uac/SOI-Tax-Stats—Individual-Statistical-Tables-by-Size-of-Adjusted-Gross-Income.

17.

These taxes include the regular income tax and alternative income tax, as well as self-employment taxes. Less common taxes, like unreported Social Security and Medicare taxes and certain taxes on IRAs, are also included. For an example of these taxes, see lines 57 through 62 on the 20152016 IRS Form 1040, https://www.irs.gov/pub/irs-pdf/f1040.pdf.

18.

The Protecting Americans from Tax Hikes (PATH) Act (Division Q of P.L. 114-113) prevents a tax filer from claiming the EITC for any year in which the filer did not have a Social Security number (SSN) on or before the due date of the tax return for that year. This provision prevents a filer who obtains an SSN from retroactively claiming the EITC for any prior open tax years (generally three years) when the filer did not have an SSN at the time those years' returns were due.

19.

This was effective beginning with returns filed in 2017. Section 201 of the Protecting Americans from Tax Hikes (PATH) Act (Division Q of P.L. 114-113).

For more information on the nonrefundable (and refundable) portion of the child tax credit, see CRS Report R41873, The Child Tax Credit: Current Law and Legislative History, by [author name scrubbed].

1921.

In contrast, if the pre-contributionprecontribution income places them in the plateau or the phase-in range, decreasing their earned income by making certain pre-taxpretax savings contributions may either have no impact or result in a smaller credit.

2022.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) included a provision which made tax refunds, including those resulting from the EITC, disregarded in the administration of federal programs and federally assisted programs. At the end of 2012, this provision was made permanent by the American Taxpayer Relief Act of 2012 (P.L. 112-240).

2123.

U.S. Congress, Senate Committee on Finance, Tax Reduction Act of 1975, Report to Accompany H.R. 2166, 94th Cong., 1st sess., March 17, 1975, S. Report 94-36, p. 33.

2224.

The increase in the value of the credit in 2009 is likely due to the changes made by the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5) which expanded the credit for families with three or more children and increased marriage penalty relief.