Line 27 — Earned Income Credit

Eligibility and Income Limits

The EITC is available to taxpayers who have earned income from wages, salaries, tips, or self-employment, and whose adjusted gross income and investment income fall below certain thresholds. For 2025, the maximum credit ranges from $649 (no qualifying children) to $4,328 (1), $7,152 (2), $8,046 (3+). For MFJ with 3+ children, AGI cap is $68,675. Investment income limit: $11,950.

To claim the EITC, you must have a valid Social Security number, be a U.S. citizen or resident alien for the full year, not file Form 2555 (Foreign Earned Income), and meet the age requirements (at least 25 and under 65 if claiming without a qualifying child). Qualifying children must meet relationship, age and joint return tests.

Calculating the Credit

The EITC is calculated using the Earned Income Credit Table in the Form 1040 instructions or the EIC Worksheet. The credit increases as earned income rises (the phase-in range), reaches a plateau, and then gradually phases out as income continues to increase. The phase-in and phase-out rates differ based on the number of qualifying children. Self-employed taxpayers must have net self-employment earnings (after expenses) to qualify, and the IRS scrutinizes EITC claims for self-employment income more closely than W-2 income.

Refund Timing

By law, the IRS cannot issue refunds for returns claiming the EITC before mid-February, even if the return was filed in January. This provision, under the Protecting Americans from Tax Hikes (PATH) Act, gives the IRS additional time to verify EITC claims and reduce fraud. Taxpayers relying on the EITC refund should plan for this delay and not expect funds before late February or early March. The credit is a critical financial support for millions of working families and can significantly affect year-end financial planning for eligible taxpayers.

Related Forms and Schedules

The earned income credit on Line 27 is one of the most valuable refundable credits in the tax code. When the taxpayer has qualifying children, Schedule EIC must be completed to provide the child-specific information the IRS requires to verify the claim. Taxpayers without qualifying children may still be eligible for a smaller earned income credit based on their own age and income.