The Earned Income Tax Credit (EITC) peaks at a certain income level and then phases out as income continues to rise. This "phase-out" range depends on your filing status and the number of qualifying children. Here's how it works for 2023: |
1. EITC for a Married Couple Filing Jointly (with one child): |
Peak of the Credit:
For a married couple with one child, the EITC reaches its maximum value at $19,530 in earned income. After this point, the credit begins to phase out. Phase-Out Range: The credit starts phasing out once the couple's earned income reaches $25,000. The phase-out continues until $53,120 in earned income, which is the upper limit for a married couple with one child. After this income level, the credit is completely phased out.
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2. EITC for Other Filing Statuses: |
If you're not married or have a different number of children, the income ranges for the EITC will change: |
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3. Maximum EITC Amounts for 2023: |
One child: The maximum EITC a married couple can receive with one child is about $3,995. Two children: The maximum is about $6,604. Three or more children: The maximum is about $7,430.
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Summary: |
For a married couple with one child, the EITC peaks at an income of $19,530, and the credit phases out completely by $53,120. At the peak, you get the maximum EITC of about $3,995, which then decreases as income rises above that point. |
Great! Let's take a deeper look at the phase-out rates for the Earned Income Tax Credit (EITC) in 2023 and how they change based on filing status and the number of qualifying children. |
1. Phase-Out Rates Explained |
The EITC phases out as your earned income and adjusted gross income (AGI) increase beyond certain thresholds. The phase-out is gradual — the credit decreases by a fixed amount as income rises. Once the phase-out ends, you no longer receive any EITC. |
Phase-Outs for 2023 (Married Filing Jointly) |
For One Child: |
Maximum EITC: $3,995 Earned Income to Peak: $19,530 Phase-Out Starts: At $25,000 earned income Phase-Out Ends: At $53,120 earned income Phase-Out Rate: 21.06% (meaning for every dollar earned beyond the phase-out starting point, you lose 21.06 cents of the credit).
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Example: |
If you earn $30,000, you'll lose a portion of your EITC, but still receive a smaller amount, since you’re in the phase-out range. If you earn $53,120, your EITC will be reduced to zero.
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For Two Children: |
Maximum EITC: $6,604 Earned Income to Peak: $22,410 Phase-Out Starts: At $25,000 earned income Phase-Out Ends: At $58,000 earned income Phase-Out Rate: 21.06%
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Example: |
If you earn $40,000, the credit will start to phase out, reducing the total amount. If you reach $58,000, you will no longer qualify for any EITC.
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For Three or More Children: |
Maximum EITC: $7,430 Earned Income to Peak: $24,370 Phase-Out Starts: At $25,000 earned income Phase-Out Ends: At $63,500 earned income Phase-Out Rate: 21.06%
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Example: |
If you earn $50,000, your credit will be reduced according to the phase-out rate. Once you hit $63,500, you will have no more EITC.
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For Single or Head of Household Filers |
For One Child: |
Maximum EITC: $3,995 Earned Income to Peak: $19,530 Phase-Out Starts: At $25,000 earned income Phase-Out Ends: At $48,650 earned income Phase-Out Rate: 21.06%
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For Two Children: |
Maximum EITC: $6,604 Earned Income to Peak: $22,410 Phase-Out Starts: At $25,000 earned income Phase-Out Ends: At $53,120 earned income Phase-Out Rate: 21.06%
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For Three or More Children: |
Maximum EITC: $7,430 Earned Income to Peak: $24,370 Phase-Out Starts: At $25,000 earned income Phase-Out Ends: At $56,410 earned income Phase-Out Rate: 21.06%
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How the Phase-Out Works: |
Let's take an example of a married couple with one child earning $30,000: |
Base EITC: First, you calculate the maximum credit. In this case, with one child and $30,000 of earned income, the couple will have a partial EITC because they are in the phase-out range. The full amount of the credit would be $3,995, but since their income exceeds $19,530, they lose part of it. Phase-Out Calculation: The phase-out begins at $25,000. So, the couple's $30,000 of earned income is $5,000 over the threshold. The credit reduces by 21.06% for every dollar over $25,000. $5,000 x 21.06% = $1,053 The original credit of $3,995 is reduced by $1,053, resulting in an EITC of $2,942.
Total EITC for $30,000 earned income: $2,942 (instead of the full $3,995).
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Key Takeaways: |
The EITC peaks at specific income thresholds, which vary by the number of children and filing status. Phase-out starts once your income exceeds a certain level (e.g., $25,000 for a married couple with one child) and continues until the credit is completely phased out. The phase-out rate is 21.06% (for all filing statuses), meaning you lose a percentage of your EITC as your income rises within the phase-out range.
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 | EITC - The Earnest Income Tax Credit |
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