The Earned Income Tax Credit (EITC): Changes for 2011 and 2012

Christine Scott
Specialist in Social Policy

The earned income tax credit (EITC), established in the tax code in 1975, provides cash assistance to lower income working parents and individuals through the tax system. The EITC will be higher in 2011 and 2012 than it was in 2010. An increase in the size of the EITC will occur because the maximum amount of earned income used to calculate the credit and the phaseout income level are indexed for inflation. The increases reflect the inflation adjustment.

For tax year 2011, the maximum EITC for tax filers without children was $464, and it will increase to $475 in 2012. For families with one child, the maximum credit was $3,094 in tax year 2011, and it will increase to $3,169 in 2012. For families with two children, in tax year 2011 the maximum was $5,112, and it will increase to $5,236 in 2012.

The American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) created a new credit category, for families with three or more children for tax years 2009 and 2010.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) extended the new category for three or more children to tax years 2011 and 2012. For families with three or more children, in tax year 2011, the maximum credit was $5,751, and it will increase to $5,891 in 2012.

Beginning in tax year 2008, the phase-out level for married couples filing a joint tax return was $3,000 higher than the level for other filers. ARRA increased the $3,000 differential for married couples to $5,000 for tax year 2009, and inflation adjusted the amount for tax year 2010.

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) extended the higher phase-out level to tax years 2011 and 2012. In tax year 2011, the phase-out level for married couples was $5,080 higher than for unmarried taxpayers, and it will increase to $5,210 in tax year 2012.


Date of Report: October 20, 2011
Number of Pages: 6
Order Number: RS21352
Price: $19.95

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