What is Earned Income Credit, EIC Limits & Requirements?

What is Earned Income Credit (EIC)? Also known as the Earned Income Tax Credit or EITC the EIC is a benefit for working people with low to moderate income. To qualify, you must meet certain requirements. You must also file a tax return even if you don’t owe any taxes or are not required to file. The EITC reduces the taxes you owe and may even give you a refund.

EIC or EITC Requirements

There are certain requirements you must meet in order to be eligible for the EITC. The first Earned Income Credit eligibility criterion you must meet is having an income. This includes income from working for someone or running your own business. You must also meet some additional requirements.

If you are claiming a child, your child must meet all the qualifying child rules for you (or your spouse if you file a joint return).

If you do not claim a child that qualifies you for the credit, you must meet these rules:

• You must have resided in the US for more than six months.
• No one else can claim you as a dependent on their tax return.
• Normally, you must be between the ages of 25 and 65 at the end of the tax year. However, for tax year 2021, there is an exception.
  • The age maximum for those with no qualifying children has been eliminated.
  • The age minimum requirement of 25 has been reduced to 19, unless you are an Earned Income Credit specified student with a minimum age requirement of up to 24. For former foster children and youth who are homeless the minimum age is 18.

What is the Maximum Income to Qualify for Earned Income Credit?

There are EIC or EITC limits on how much you can earn before you no longer qualify for the benefit. The number of children you are claiming will determine these limits.

The Income limits to receive EITC typically adjust upward each year and are noted in this table for 2021:

Children or relatives claimed	Maximum AGI (filing as single, head of household, widowed or married filing separately*)	Maximum AGI (filing as married filing jointly)
Zero	$21,430	$27,380
One	$42,158	$48,108
Two	$47,915	$53,865
Three	$51,464	$57,414

And the maximum amount of credit each year you can claim also adjusts each year:

The maximum amount of credit you can claim for 2021:

• No qualifying children: $1,502
• 1 qualifying child: $3,618
• 2 qualifying children: $5,980
• 3 or more qualifying children: $6,728

The credit amount received varies considerably due to income. If the credit is more than what you owe, it doesn’t just bring your tax bill to zero. This credit is refundable. It means you get the difference as a refund. For example, if according to the standard tax rate your tax due was $550, but your Earned Income Credit was $1,550, you would get a refund of $1000.

If you aren’t sure if you qualify for EITC, the IRS has a publication to guide you through the process. You can also use the IRS online tool called the EITC Assistant. 

Note: This article was originally written by Linda Jacob two years ago. It was updated by Jerry Zeigler in December 2021. Zeigler is a Navy veteran who serves service members with financial counseling and education. As an Accredited Financial Counselor®, he is a member of the Better Financial Counseling Network and is the owner of JZ Financial Management. As a tax professional and Enrolled Agent, he has a passion for helping taxpayers navigate taxes.