The "Worker Relief and Credit Reform Act of 2025" expands the Earned Income Tax Credit (EITC) to include students, lowers the minimum age, treats care-giving and learning as compensated work, broadens the definition of qualifying dependents, increases credit amounts for certain individuals, allows for advance monthly payments, and establishes an outreach program to educate taxpayers.
Gwen Moore
Representative
WI-4
The Worker Relief and Credit Reform Act of 2025 expands the Earned Income Tax Credit (EITC) to include qualifying students, lowers the minimum age to claim the credit to 18, and broadens the definition of qualifying dependents. It also establishes a program for advance monthly payments of the EITC and mandates an outreach program to educate taxpayers about the EITC and advance payments. Furthermore, the bill increases the credit for certain unmarried individuals with two or more qualifying children.
EITC Gets Major Overhaul: Bill Expands Credit to Students, Younger Workers, Adds Advance Monthly Payments Starting 2025
The Worker Relief and Credit Reform Act of 2025 proposes significant changes to the Earned Income Tax Credit (EITC), a program designed to help low-to-moderate income working individuals and families. Effective for tax years after December 31, 2024, Section 2 of the act broadens eligibility, adjusts credit amounts, and introduces a system for receiving payments throughout the year.
Who's Getting a Boost?
This bill opens the EITC door to more people. First, the minimum age to claim the credit drops from 25 to 18. Second, it specifically includes "qualifying students" – generally, those eligible for Pell Grants or meeting certain income tests. Critically, the bill treats qualifying students and individuals caring for dependents (including relatives over 65 or those unable to self-care, under certain conditions) as having earned income for EITC purposes, setting a base "earned income amount" at $4,000. This means someone primarily focused on studying or caregiving could potentially qualify based on this deemed income. The bill also sets the phaseout threshold at $30,000, adjusting both amounts for inflation after 2025. For example, a 19-year-old college student juggling classes and a part-time job, or someone staying home to care for an elderly parent, might now find themselves eligible for the EITC when they weren't before.
Cash Flow Changes: Advance Payments Arrive
One of the biggest practical changes is the introduction of advance monthly EITC payments. Eligible taxpayers could elect to receive up to 75% of their estimated annual credit in installments throughout the year, potentially easing cash flow pressures. The IRS would offer payment options, including prepaid debit cards. This could mean a qualifying family gets a portion of their tax refund monthly, rather than waiting for a lump sum after filing their return. An online portal is also planned to help taxpayers manage these payments.
The Fine Print: Recapture, Consultations, and Outreach
Getting money early comes with a catch: accuracy matters. If someone receives more in advance payments than they ultimately qualify for (perhaps due to income changes during the year), the IRS is mandated to recapture the excess amount. Failing to repay could restrict access to future advance payments. To help taxpayers navigate this, the bill requires the IRS to offer one-on-one consultations to explain eligibility and the risk of overpayment before someone opts into advance payments. Additionally, the Treasury is tasked with creating a 10-year outreach program, using letters, workshops, and quarterly reminders for advance payment recipients, to educate the public about the EITC changes. While the outreach aims to improve understanding, the recapture provision means careful income estimation will be crucial for those choosing advance payments.