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Each year, EITC Awareness Day shines a spotlight on one of the most effective and underutilized tools we have to support working families: the Earned Income Tax Credit (EITC). For more than five decades, the EITC has helped millions of people make ends meet, strengthen family stability, and move toward economic stability.
EITC highlights a great example of a bipartisan federal benefit that works. Lawmakers from across the aisle have long supported the credit because it rewards work, supports families, and strengthens local economies. Yet, millions of eligible workers still miss out on the EITC each year.
Established in 1975, the EITC emerged to support working families during a period of economic instability, amid the 1974 recession and rising food and energy prices. More than 50 years later, the credit remains a cornerstone of federal policy to support individuals earning low wages.
Claimed annually through the tax filing process, the EITC supplements earnings and offsets payroll taxes, providing critical financial support to households across the nation.
Today, the EITC is the largest means-tested anti-poverty program in the United States. It delivers billions of dollars directly into local communities each year, money that helps families cover basic needs and strengthen local economies.
In 2024, the EITC lifted about 4.4 million people above the poverty line, including 2.3 million children, and reduced the severity of poverty for another 16.6 million people, including about 6 million children.
In 2025, approximately 24 million workers and families received nearly $70 billion in EITC. Its success at the federal level has also driven innovation at the state level. Today, 31 states, Washington, D.C., and Puerto Rico offer their own EITCs, building on the federal credit to provide additional support and strengthen the economic resilience of working families.
Despite its proven effectiveness, economic hardship remains a daily reality for millions of Americans. Tens of millions of people, including millions of children, live below the federal poverty line, often despite having at least one working adult in the household.
Research consistently shows that the EITC is associated with better health, increased adult earnings, and stronger educational outcomes for children.
One of the most powerful features of the EITC is that it is a fully refundable tax credit. This means that even if a worker owes little or no federal income tax, they can still receive the full value of the credit as a refund.
For many households, the EITC represents the largest single lump-sum payment they receive all year, with the average refund totaling just under $3,000 ($2,894) last year.
Studies show that families use their tax refunds strategically to pay for essentials like housing, food, utilities, transportation, and childcare. In other words, the EITC provides both immediate relief and breathing room for the future. It helps families stabilize and plan ahead.
Eligibility for the EITC depends on several factors, including income, family size, and filing status. Workers must have earned income and valid Social Security numbers for themselves, their spouse (if filing jointly), and any qualifying children. Income limits vary, but many people earning more than the minimum wage may still qualify. Too often, eligible workers miss out, not knowing they are eligible to redeem the credit.
Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer no-cost tax return preparation services by IRS-certified volunteers at over 9,500 locations nationwide, ensuring eligible taxpayers can claim the credits they earned without paying any additional fees.
Everyone has a role to play in ensuring eligible workers receive the EITC:
At Prosperity Now, we believe the EITC is more than a tax benefit. It is a proven investment in work, family stability, and a stronger economy.
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