TAX PROVISION
Earned Income Tax Credit (EITC)
Using Tax Policy to Stimulate the Economy | March 2021
For 2021, the EITC ranges from $543 to $6,728 (increased from $538 to $6,660) dependent on filing status, number of children and level of earned income. Table 1 details the interplay between earned income and number of children.
Table 1 | |||
| Max Earnings, Single/Head of Household | Max Earnings, Married Jointly | Number of Children | Max EITC |
$15,980 | $21,920 | 0 | $543 |
$32,158 | $48,108 | 1 | $3,618 |
$47,915 | $53,865 | 2 | $5,980 |
$51,464 | $57,414 | 3 or more | $6,728 |
As with the EITC in 2020, taxpayers may calculate their 2021 credit using their 2019 taxable income if it results in a higher credit. The amount of allowable investment income has also been increased from $2,200 to $10,000 before the credit is disallowed.
The qualification for the credit for filers without children has been expanded to include filers 19 or older except for students who must be 24. Qualified former foster or homeless youth qualify if 18 or older. There is no maximum age for the 2021 credit. Previously, taxpayers had to be at least 25 and less than 65 years old.
Also note that the previous law disallowed the EITC to an otherwise eligible individual who could not meet the identification requirements for any qualifying children. Under the ARPA, a qualifying individual who cannot meet the identification requirements for any qualifying children can claim the EITC as a qualifying individual with no children.