2021 Changes to Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) is designed to help Americans with low-paying jobs, particularly those with children, and the changes are most helpful for those without qualifying children.

Permanent changes

1. Previously, to be eligible for the credit, people had to have less than $3,650 (2020) of investment income. For 2021, that is increased to $10,000, and this limit will be adjusted for inflation in the years to come.
2. Some married but separate couples can now claim the EITC on separate returns. 
3. Some folks may also now be eligible for childless EITC. 

Temporary 2021 changes

1. IF 2021 income is lower than the 2019 income and IF using the 2019 income instead of the 2021 yields a higher EITC, the 2019 income can be used for the EITC income calculation instead of the 2021 income. This procedure is intended to help those who have lower income due to the COVID pandemic. 
2. The maximum possible EITC for taxpayers with no qualifying children would have been $543. This has been increased to $1,502. 
3. The age maximum for taxpayers with no qualifying children has been eliminated. 
4. The age minimum requirement of 25 has been reduced to 19 unless the taxpayer is a specified student who has a minimum age requirement of 24. For former foster children and youth who are homeless, the minimum age is 18. 

EITC qualifying income levels

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

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

How much is the credit?

The maximum amount of credit each year you can claim also adjusts each year.

The maximum amount of credit you can claim:

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

Your earned income and adjusted earned income to determine how much you could receive in EITC credits in your tax refund. The IRS EITC assistant can help you determine if you are eligible for the credit and estimate how much your credit will be. 

While the actual amount of credit received can vary considerably based on income and qualifying children, this credit is incredibly helpful in giving people a boost during tax time.