Bill Expands Earned Income Credit: Lowers Age, Removes Cap, Increases Payouts for Workers Without Kids Post-2025

The Tax Cut for Workers Act of 2025 aims to significantly expand the Earned Income Credit (EIC) for individuals without qualifying children. Starting for tax years after December 31, 2025, this bill lowers the minimum age to claim the credit, removes the upper age limit entirely, and substantially increases both the credit amount and the income levels at which it phases out. Essentially, it's designed to put more money back into the pockets of lower-to-moderate income workers who don't have dependent children.

Opening the EIC Door Wider

So, what's changing? First, the age rules get a major update (Sec. 2). Currently, you generally have to be 25 to 64 to claim the EIC if you don't have kids. This bill drops the minimum age to 19 for most students, 18 for qualified former foster youth or homeless youth, and 24 for others, while completely removing the 65+ age cap. The bill also doubles the key percentages used to calculate the credit and phaseout, bumping them from 7.65% to 15.3%. Alongside this, the income thresholds are raised significantly – for instance, the maximum earnings to get the full credit jumps from $4,220 to $9,820 (adjusted annually for inflation). Think of a 22-year-old working part-time while finishing school, or a 66-year-old semi-retired cashier – under this bill, they could now qualify for this valuable tax credit where they previously couldn't.

Flexibility for Fluctuating Income

Life happens, and incomes can swing year-to-year. This act introduces a helpful option starting after December 31, 2025 (Sec. 4). Taxpayers calculating their EIC can choose to use either their current year's earned income or their prior year's earned income, whichever gives them a larger credit. If you're filing jointly, you'd use the combined income of both spouses from the chosen year. This could be a big deal for someone who faced a job loss, reduced hours, or started a business with low initial earnings – they won't necessarily see their EIC drop if the previous year was better financially. The bill notes that mistakes in applying this election will be treated as calculation errors.

Making Territorial Credits Permanent

The bill also addresses the EIC in U.S. territories (Sec. 3). It removes the expiration dates (currently set for the end of 2025) on provisions related to how the EIC applies in Puerto Rico, American Samoa, and other possessions with similar tax systems. This move essentially makes the current EIC rules for these territories permanent, providing ongoing tax relief parity for workers there.