What the EITC Actually Is

The Earned Income Tax Credit is a refundable federal tax credit for workers with low to moderate income. “Refundable” means you get the money even if you don’t owe any tax — the IRS sends you a check (or direct deposit) for the difference. It was designed to reward work, and the credit amount grows as your earned income increases, up to a point. After that, it phases out gradually.

The credit is based on earned income — wages, salary, tips, and net self-employment earnings. Investment income above $11,600 (for 2025) disqualifies you entirely. It’s one of the few credits where the IRS is essentially giving money to people who work but don’t earn very much, and it’s one of the largest anti-poverty programs in the federal tax code.

2025 Federal EITC Amounts

The exact credit depends on your filing status, income, and number of qualifying children. Here are the maximum federal credit amounts for 2025:

• No children: up to $632
• One child: up to $4,213
• Two children: up to $6,960
• Three or more children: up to $7,830

The income limits vary by filing status. For a married couple filing jointly with three children, the maximum income to qualify is around $66,819. For a single filer with no children, it drops to about $19,104. These thresholds adjust each year for inflation.

New York State EITC — 30% of Your Federal Credit

New York matches 30% of your federal EITC. This is automatic — if you qualify for the federal credit and file a New York State return, you get the state credit too. You claim it on Form IT-215.

So if your federal EITC is $6,960 (two qualifying children), your New York State credit adds another $2,088. That’s money directly off your state tax bill, and since the New York EITC is also refundable, you receive the full amount even if your state tax liability is zero.

New York City EITC — An Extra 5%

On top of the state match, New York City adds its own EITC worth 5% of the federal credit. It’s claimed on the same Form IT-215. Using the same example — $6,960 federal credit — the city adds $348. Not huge on its own, but stacked with the federal and state credits, it adds up.

A single parent in the Bronx with two qualifying children and $30,000 in earned income could receive roughly $6,960 (federal) + $2,088 (state) + $348 (city) = $9,396 total across all three credits. For a family at that income level, that’s more than three months of rent in some parts of the city.

Who Qualifies — the Rules Most People Miss

The basic requirements are straightforward: you need earned income, a valid Social Security number, and you must file a return (even if you’re not required to). But a few rules trip people up.

Self-employed workers qualify, but their net profit counts as earned income — not gross revenue. A freelance photographer in Brooklyn who grosses $50,000 but has $30,000 in expenses shows $20,000 in earned income. That’s the number that determines their credit.

You can’t claim the EITC if you have more than $11,600 in investment income. This catches people who have modest wages but received a one-time windfall — a stock sale, an inheritance payout, rental income. One year of investment income above the threshold wipes out the entire credit for that year.

Filing status matters more than people think. “Married filing separately” disqualifies you from the EITC entirely. If you’re married and want the credit, you must file jointly. The only exception is a narrow rule for separated spouses who lived apart for the last six months of the year and have a qualifying child.

Claiming the Credit — What You Need

You claim the federal EITC on your Form 1040 using Schedule EIC if you have qualifying children. The state and city credits are claimed on New York Form IT-215, which flows from your federal return.

The IRS delays refunds for returns claiming the EITC — by law, they can’t issue the refund before mid-February, even if you file on January 15. This is an anti-fraud measure. Most EITC refunds land in bank accounts by late February or early March if the return is filed electronically with direct deposit.