What is the Earned Income Tax Credit Limit for 2021?

The Earned Income Tax Credit (EITC) is a refundable tax credit for low- to moderate-income working individuals and families. The amount of EITC you can claim depends on your income, marital status, and number of qualifying children. For tax year 2021, the EITC limits are as follows:

EITC Income Limits for 2021

To qualify for the EITC in 2021, your adjusted gross income (AGI) and earned income must be below the following thresholds

• Filing as Single, Head of Household, Widowed or Married Filing Separately:

  • $21,430 if you have no qualifying children
  • $42,158 if you have one qualifying child
  • $47,915 if you have two qualifying children
  • $51,464 if you have three or more qualifying children

• Filing as Married Filing Jointly:

  • $27,380 if you have no qualifying children
  • $48,108 if you have one qualifying child
  • $53,865 if you have two qualifying children
  • $57,414 if you have three or more qualifying children

Your earned income includes wages, salaries, tips, and net earnings from self-employment. AGI includes your earned income plus other sources of income like interest, dividends, alimony, capital gains, etc.

If your AGI or earned income exceeds the thresholds above, you will not qualify for the EITC. The income limits are higher for married couples filing jointly

EITC Maximum Credit Amounts for 2021

In addition to income limits, there are maximum credit amounts you can claim based on the number of qualifying children you have:

• With no qualifying children, you can claim a maximum credit of $1,502
• With one qualifying child, you can claim a maximum credit of $3,618
• With two qualifying children, you can claim a maximum credit of $5,980
• With three or more qualifying children, you can claim a maximum credit of $6,728

So if you are single with two children and your income qualifies, you could potentially claim an EITC of up to $5,980 when you file your 2021 taxes in 2022. The more qualifying children you have, the higher your maximum credit amount will be, up to $6,728.

What is a Qualifying Child for the EITC?

A qualifying child for the EITC must meet certain age, relationship, residency and tax return requirements:

• Must be under age 19 at the end of 2021 (or under 24 if a full-time student)
• Must be your son, daughter, adopted child, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of these relatives
• Must have lived with you for more than half of 2021
• Must not file a joint tax return for 2021

Having one or more qualifying children opens up the potential for a much larger EITC based on the maximum credits above. Children must meet all the requirements to be considered qualifying children.

EITC Income Limits Vary by State

The federal EITC income limits above apply across all states. However, over half of states also offer their own Earned Income Tax Credits with different eligibility rules.

For example, the income limits to qualify for California’s EITC (called CalEITC) are much higher in 2021:

• $30,846 with no qualifying children
• $37,094 with one qualifying child
• $42,158 with two qualifying children
• $56,844 with three or more qualifying children

So California residents may qualify for CalEITC even if their income exceeds the federal limits. Be sure to check the rules for your state.

Claiming the EITC with Your Tax Return

To receive the Earned Income Tax Credit, you must file a federal tax return (and state return if applicable) and specifically claim the EITC. The credit will not be issued automatically.

For the 2021 tax year, you will claim the EITC when you file your taxes in 2022. The IRS provides Schedule EIC to calculate your credit or you can have tax software do it for you.

If eligible, the EITC will either lower your tax liability or give you a tax refund. Most tax preparation services can help determine if you qualify.

The EITC provides substantial tax credits for low- and moderate-income working families and individuals. For 2021, the maximum credits range from $1,502 to $6,728 based on income, marital status and number of qualifying children. Be sure to check both federal and state rules to maximize your potential credit. Claim the EITC when filing your 2021 taxes in 2022.