Earned Income Tax Credit

Earned Income Tax Credit means:
a refundable credit that is adjusted for family size. For a taxpayer with one qualifying child (see qualifying person), the EITC is 26.3% of the first $7,750 of earned income in 1994. The maximum credit in 1994 is $2,038, which is reduced by 15 98% of earned income (or Adjusted Gross Income, if greater) in excess of $11,000. For 1995 and thereafter, the credit rate increases to 34.0%. The maximum amount of earned income on which the credit can be claimed is (an estimated) $6,170 (this is a $6,000 base in 1994, adjusted for projected inflation). The phase-out rate for 1995 and thereafter is 15.98%.

For a taxpayer with two or more qualifying children, the EITC is 30.0% of the first $8,425 of earned income in 1994. The maximum credit for 1994 is $2,257, which is reduced by 17.68% of earned income (or Adjusted Gross Income, if greater) in excess of $11,000. The credit rate increases over time and equals 36.0% for 1995 and 40.0% for 1996 and thereafter. The phase-out rate is 20.22% for 1995 and 21.06% for 1996 and thereafter.

Under certain conditions, a credit may be available to a taxpayer with no qualifying children. Former IRC (check if this IRC provision is current here) §32.

See the entries Income Tax and State Income Tax in the American Encyclopedia of Law.