Earned Income Tax Credit (EITC)

Definition

The EITC under Section 32 increases with earned income up to a maximum, plateaus, and then phases out as income rises. The maximum credit depends on the number of qualifying children. The EITC is fully refundable, meaning it can produce a refund larger than the taxpayer's tax liability.

Examples

• A single parent with two qualifying children earning $25,000 may receive a substantial EITC refund.