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Income Tax Blog > Income Tax Tips > Earned Income Tax Credit
The United States Federal Earned Income Tax Credit (EITC)
The United States federal Earned Income Tax Credit (EITC) is a refundable tax credit that reduces or eliminates the taxes that low-income working people pay (such as payroll taxes) and also frequently operates as a wage subsidy for low-income workers.
Enacted in 1975, the then very small EITC was expanded in 1986, 1990, 1993, and 2001 with each major tax bill, regardless of whether the tax bill in general raised taxes (1990), lowered taxes (2001), or eliminated other deductions and credits (1986).
Today, the EITC is one of the largest anti-poverty tools in the United States (despite the fact that income measures, including the poverty rate, generally do not account for the credit), and enjoys broad bipartisan support.
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