How to Calculate the Earned Income Tax Credit (EITC)

To calculate the Earned Income Tax Credit, you need three numbers: your earned income, your filing status, and the number of qualifying children in your household. The credit grows at a fixed rate for every dollar you earn until it reaches a maximum, holds steady across a plateau, and then shrinks once your income passes a phaseout threshold. For the 2026 tax year, the maximum credit ranges from $664 with no qualifying children to $8,231 with three or more.¹

The Three Zones of the Calculation

The EITC formula has three parts. Knowing which zone your income falls into tells you how the credit behaves when your earnings change.

Phase-In: The Credit Grows

From your first dollar of earned income, the credit climbs at a fixed rate. For 2026 that rate is 7.65 cents per dollar with no children, 34 cents with one child, 40 cents with two children, and 45 cents with three or more children. The climb continues until your earned income hits the amount that produces the maximum credit: $8,680 with no children, $13,020 with one child, and $18,290 with two or more children.¹

Plateau: The Credit Holds Steady

Between the earned income amount and the phaseout threshold, your credit stays at the maximum regardless of how much more you earn. A single filer with one child in 2026 holds the full $4,427 from $13,020 in earned income all the way up to $23,890 in adjusted gross income.

Phase-Out: The Credit Shrinks

Once your AGI (or your earned income, whichever is higher) crosses the phaseout threshold, the credit starts falling. The 2026 phase-out rates are 7.65 cents per dollar over the threshold with no children, 15.98 cents with one child, and 21.06 cents with two or more children. Married couples filing jointly get a higher phaseout threshold: $31,160 for filers with children and $18,140 for filers without, meaning joint filers keep the full credit to a higher income level.¹

A Worked Example

Say you file as a single parent with one qualifying child and $30,000 in earned income for 2026.

Your credit phases in at 34% of your earnings up to $13,020, which gives you the maximum credit of $4,427. Because $30,000 is above the $23,890 phaseout threshold for your status, the credit starts shrinking. The excess over the threshold is $30,000 minus $23,890, or $6,110. Multiply by the phase-out rate of 15.98%: $6,110 × 0.1598 = $976. Subtract that from the maximum: $4,427 minus $976 comes to roughly $3,451. That is your credit.

Because the credit is refundable, it first wipes out any tax you owe, and anything left over comes back to you as a refund.

2026 Maximum Credits and Income Ceilings

The IRS indexes these numbers to inflation each year. The 2026 figures:¹

No qualifying children: maximum $664; credit reaches zero at $19,540 for most filers, $26,820 for married filing jointly.
One qualifying child: maximum $4,427; zero at $51,593 for most filers, $58,863 joint.
Two qualifying children: maximum $7,316; zero at $58,629 for most filers, $65,899 joint.
Three or more qualifying children: maximum $8,231; zero at $62,974 for most filers, $70,244 joint.

Those ceilings are where the credit disappears entirely. The reduction starts well below them, at the phaseout thresholds that drive the actual calculation.

What Counts as Earned Income

Only money you actively work for feeds the calculation. Wages, salaries, tips, net self-employment earnings, union strike benefits, and certain employer-paid disability benefits all qualify. If you’re self-employed, your earned income is your net profit after expenses, and you must claim every allowable deduction when computing it rather than cherry-picking the ones that help your credit.²

Several common income types do not count toward earned income: unemployment benefits, Social Security, pensions, alimony, child support, interest, and dividends.³ They won’t grow your credit, but they do raise your adjusted gross income, which can push you deeper into the phase-out zone.

Who Counts as a Qualifying Child

Family size is the biggest lever in the formula, so getting the child count right matters. A child qualifies if they meet all three tests:

Relationship: your son, daughter, stepchild, foster child, sibling, step-sibling, or a descendant of any of these such as a grandchild or niece.
Residency: lived with you in the United States for more than half the tax year. U.S. military bases abroad count; Puerto Rico and other U.S. territories do not.
Age: under 19 at year-end, or under 24 if a full-time student for at least five months. A child who is permanently and totally disabled qualifies at any age.⁴

When more than one person could claim the same child, the IRS applies tiebreakers in order. A parent beats a non-parent. Between two parents filing separately, the one the child lived with longer wins; if time was equal, the parent with the higher AGI wins. When no parent claims the child, the non-parent with the highest AGI gets the credit.⁴ If you lose the tiebreaker, you can still claim the smaller no-children credit if you otherwise qualify.

Eligibility Gates That Override the Math

A few rules can zero out the credit no matter what the formula says.

Valid Social Security numbers. You, your spouse if filing jointly, and every qualifying child must each have a valid SSN issued by the filing deadline, including extensions. An ITIN does not work.⁵

Investment income cap. For 2026, investment income above $12,200 disqualifies you entirely. One dollar over the limit and the credit drops to zero.¹ Investment income here includes taxable and tax-exempt interest, dividends, capital gains, rental and royalty income, and net passive activity income.⁶

Age limits without children. If you have no qualifying child, you must be at least 25 and under 65 at year-end. For joint filers, at least one spouse must fall in that range.⁵ There’s no age requirement when you claim with qualifying children.

Combat Pay Election

Members of the military who receive nontaxable combat zone pay can elect to include it as earned income for EITC purposes. It’s all or nothing: include every dollar or none. Because the choice can move you further into the phase-in range (helping your credit) or further into the phase-out range (hurting it), run the calculation both ways before deciding. The election is reported on Form 1040, line 1i.⁷

Tools That Do the Math for You

You don’t have to run the formula by hand. The Earned Income Credit Worksheet in the Form 1040 instructions walks through each step and points you to the EIC Table, which lists the exact credit for every income range in $50 increments. Find your income band, match the column to your number of children, and read off the amount.

IRS Publication 596 covers the same ground in more depth and reproduces the full EIC Table for the current tax year.⁸ It’s the place to go when your situation is complicated: self-employment income, uncertain qualifying-child status, or a mix of earned and unearned income.

The IRS also runs an online EITC Assistant that asks about your income, filing status, and dependents, then tells you whether you qualify and estimates the credit.⁹ For the exact dollar figure you enter on your return, the EIC Table in Publication 596 or the Form 1040 instructions is the source.

One last thing worth checking after you’ve calculated the federal number: roughly 28 states and local jurisdictions offer their own earned income credits, typically figured as a percentage of your federal EITC and ranging from 5% to 125%.¹⁰ If you qualify federally, the state credit often flows directly from the amount you just computed.

1
Internal Revenue Service. Revenue Procedure 2025-32
2
Internal Revenue Service. Earned Income, Self-Employment Income and Business Expenses
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Internal Revenue Service. Earned Income and Earned Income Tax Credit Tables
4
Internal Revenue Service. Qualifying Child Rules
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Internal Revenue Service. Who Qualifies for the Earned Income Tax Credit
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Office of the Law Revision Counsel. 26 USC 32 – Earned Income
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Internal Revenue Service. Updates to Publication 3 Regarding the Nontaxable Combat Pay Election
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Internal Revenue Service. Publication 596 – Earned Income Credit
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Internal Revenue Service. Use the EITC Assistant
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Internal Revenue Service. States and Local Governments With Earned Income Tax Credit