INSIGHTi
The “Childless” EITC: Summary of Current
Law and Proposed Expansion in House
Reconciliation Legislation
February 19, 2021
The earned income tax credit (EITC) is the largest need-tested antipoverty program that provides cash to
families. Workers with qualifying children—that is, dependent children who live with the taxpayer for
more than half the year—receive the majority of EITC benefits. For 2018, 26.5 mil ion taxpayers received
a total of $64.9 bil ion from the EITC. Of that total, there were 6.9 mil ion recipients without qualifying
children (about 26% of the total) who received $2.1 bil ion (about 3% of the total dollars), receiving an
average credit of $302.
This Insight provides an overview of the current EITC for workers without qualifying children at home,
often cal ed the “childless” EITC. The term “childless,” however, may be misleading. Workers without
qualifying children may have noncustodial children, live with children for less than six months of a year,
or live with nonbiological children they cannot claim for the credit. This Insight also summarizes a
proposal to expand the “childless” EITC that was included in legislation submitted by the House Ways
and Means committee in response to the reconciliation directives included in the budget resolution
(S.Con.Res. 5).
What is the EITC?
The EITC is a refundable tax credit available to low-income workers. Like al tax credits, the EITC can
reduce income tax liability. Since the EITC is a refundable tax credit, if a taxpayer’s EITC is greater than
what they owe in income taxes, they can receive the difference (the portion of the credit that remains after
offsetting any income tax liability, often referred to as the “refundable portion” of the credit) as a tax
refund. This means that low-income taxpayers, who often have little to no income tax liability, can receive
the full amount of the credit. The EITC is received once a year as a lump-sum payment when households
file their federal income tax returns.
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Calculating the EITC
A taxpayer’s EITC is based on a formula that considers earned income, number of qualifying children,
marital status, and adjusted gross income (AGI). Under this formula, the EITC increases in value as
earned income increases up to a certain level. The EITC then remains at its maximum level over a
subsequent range of earned income, before gradual y decreasing in value over higher levels of income.
Although the general formula for al EITC recipients is the same, the specific values of EITC parameters
in the formula vary by the number of qualifying children (and marital status), resulting in multiple benefit
schedules il ustrated below.

For “childless” EITC recipients the credit gradual y phases in at a rate of 7.65% as earned income
increases until earned income reaches $7,100. The credit then remains at its maximum level of $543 until
income equals $8,880 if unmarried or $14,820 if married. As income exceeds these levels, the credit
gradual y declines in value at a rate of 7.65% for every dollar of income over these levels, until the credit
equals zero when income is $15,980 or greater (or $21,920 or greater, if married).
“Childless” EITC recipients must also be at least 25 years old and not older than 64 to be eligible for the
credit. Other eligibility rules apply to al recipients of the credit, including ID requirements and
investment income limits.
Proposals to Expand the “Childless” EITC
The “childless” EITC formula was not original y part of the EITC when it was first enacted in the mid-
1970s. The EITC was expanded to include taxpayers without qualifying children in 1993 as part of the
Omnibus Budget Reconciliation Act of 1993 (OBRA93, P.L. 103-66) to partly offset a gasoline tax
increase included in the law. The “childless” EITC parameters have not been statutorily modified since
OBRA93 (they are annual y adjusted for inflation).

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There have been proposals in recent years to increase the amount of the “childless” EITC. In the 116th
Congress, several bil s—including the Economic Mobility Act (H.R. 3300), the Working Families Tax
Relief Act (S. 1138/ H.R. 3157), and the Cost-of-Living Refund Act (H.R. 3157)—would have increased
the amount of the credit by adjusting the credit formula and changing the age limits for “childless” EITC
recipients, general y expanding eligibility to younger and older individuals. The Obama Administration
also proposed expanding the “childless” EITC.
In the 117th Congress, a proposal to expand the “childless” EITC was included in economic security
legislation submitted by the Committee on Ways and Means in response to the reconciliation directives
included in the budget resolution (S.Con.Res. 5).
This legislation would temporarily (for 2021 only) increase the rate at which the credit phases in, from
7.65% to 15.3%; nearly triple the maximum amount of the credit from $543 to $1,502; increase the
income level at which the credit begins to phase out from $8,880 to $11,610 (and from $14,820 to
$17,550 if married); and increase the rate at which the credit phases out from 7.65% to 15.3%.

The bil would also temporarily (for 2021 only) reduce the minimum age of eligibility from 25 to 19 for
most workers. For students who are attending school at least part-time, the age limit would be temporarily
reduced from 25 to 24. For former foster children and youth who are homeless, the minimum age would
temporarily be reduced from 25 to 18. The bil would temporarily eliminate the upper age limit, so
workers aged 65 and older would be eligible.
The budgetary cost of this one-year expansion is estimated to be $11.9 bil ion (al occurring in FY2021
and FY2022).

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Impact of expanding the “childless” EITC
Research has found that the EITC increases participation in the labor force, particularly among single
mothers, and reduces poverty. But its impacts are general y restricted to families with children. An
expanded EITC for workers without qualifying children might similarly encourage work and reduce
poverty among these individuals. However, others point out that a significant share of the “childless”
population may already have higher labor force participation rates than single mothers, so a “childless”
EITC expansion may have a more modest effect on labor force participation. An ongoing demonstration
of an expanded “childless” EITC has found a mix of modestly positive and insignificant effects on
employment and household income. In light of the continued impact of the COVID-19 pandemic on low-
wage workers, a larger “childless” EITC may also provide income support to some vulnerable workers,
including older and younger workers who are currently ineligible because of the age limits.

Author Information

Margot L. Crandall-Hollick

Acting Section Research Manager




Disclaimer
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