Earned Income Tax Credit Adjustments in 2026: How Low- to Moderate-Income Workers Could Be Affected

Overview

The Earned Income Tax Credit (EITC) is a major refundable tax credit that supports low‑ and moderate‑income workers, especially those with children. The credit amount and eligibility thresholds are adjusted annually for inflation. For the 2025 tax year, workers will still claim EITC when filing in early 2026, and changes for 2026 are based on updated IRS parameters, not a sunset of the credit itself. 

Current EITC Structure (2025 Tax Year)

For tax year 2025, the EITC is based on earned income, filing status, and the number of qualifying children, with inflation‑adjusted limits:

• No qualifying children: credit up to ~$649

• 1 child: up to ~$4,328

• 2 children: up to ~$7,152

• 3 or more: up to ~$8,046 

Workers without children may still qualify, but the credit is smaller. The maximum income levels to qualify range roughly up to $68,675 for married filing jointly (2025 amounts).

The EITC is refundable, meaning eligible taxpayers can receive a refund even if they owe no tax. 

What Does Change in 2026

For the 2026 tax year (returns filed in 2027), the EITC will continue with inflation‑adjusted amounts: the IRS has released updated parameters, including increased credit maxima and phase‑in/phase‑out thresholds:

• No child: max ~$664

• 1 child: ~$4,427

• 2 children: ~$7,316

• 3+ children: ~$8,231 

These changes reflect annual inflation indexing, not a sunset of the credit itself. There’s no indication the EITC is scheduled to expire. Rather, the credit amounts and eligibility adjust annually.

Investment income limits also adjust annually; for 2026, the limit is higher (e.g., ~$12,200 for investment income), meaning taxpayers with investment income below that threshold remain eligible. 

There’s no current statute under OBBBA that eliminates or phases out the EITC after 2025, it remains part of the tax code with annual adjustments.

Who May Be Most Affected by EITC Amounts

Groups particularly sensitive to changes in EITC thresholds include:

• Families with multiple qualifying children, since minor increases in income can significantly affect credit amounts.

• Single parents or low‑income workers whose income fluctuates near phase‑out thresholds.

• Workers without dependents, who receive smaller credits and will see their caps increase slightly for 2026.

• Seasonal or hourly workers, whose unpredictable income may affect eligibility year‑to‑year.

Even inflation‑driven changes to phase‑out thresholds can meaningfully affect refunds and eligibility. 

Planning Tips for 2026

To prepare for 2026 and maximize EITC benefits:

• Track earned income year‑round to ensure you remain within qualifying ranges.

• Maintain accurate dependent documentation, including valid Social Security numbers.

• Review interactions with the Child Tax Credit (CTC) and other credits to estimate total refund potential.

• Evaluate filing status (e.g., head of household) if it improves credit eligibility under IRS rules.

These steps help support accurate filings and maximize refundable benefits.

State‑Level EITC Considerations

Many states offer state EITCs, often based on a percentage of the federal credit. State programs can adjust independently each year as state legislatures act, potentially increasing or decreasing benefits even if federal rules remain unchanged. 

Conclusion

• The EITC remains a major refundable credit for working individuals and families.

• For 2025 tax returns (filed in 2026), amounts and thresholds are set with inflation adjustments. 

• For 2026 returns (filed in 2027), the IRS has published updated credit amounts and phase‑out thresholds reflecting continued inflation indexing. 

• There is no scheduled elimination of the EITC after 2025; changes reflect annual adjustments rather than sunset provisions.

Staying informed about annual changes each tax year ensures taxpayers can maximize the credit based on their income, filing status, and number of qualifying children.