The Internal Revenue Service (IRS) has announced an increase in the earned income tax credit (EITC) for the 2026 tax year, which may provide a significant boost to tax refunds for low-income families. This adjustment comes as part of the IRS’s annual review of tax brackets and filing requirements, influenced by inflation.
Families with three or more children could see their maximum tax credit rise to $8,231 when filing taxes in 2027, according to the newly released federal income tax brackets. For families with two children, the maximum credit will increase to $7,316, up from $7,152 in 2025. Credits for families with one child will rise to $4,427, up from $4,328, while qualifying adults without children can expect a maximum credit of $664, an increase from $649 the previous year.
One notable aspect of the EITC is that it is fully refundable, which means that it can enhance a tax refund even if the taxpayer owes no federal income tax. To qualify for this credit, taxpayers must fall below specified adjusted gross income limits. For married couples filing jointly, the credit phases out entirely at $70,224 for those with three or more children, $65,899 for two children, $58,863 for one child, and $26,820 for those without children. Single filers, as well as head of household or widowed individuals, face lower thresholds, with a complete phase-out at $62,974 for three or more children, $58,629 for two children, $51,593 for one child, and $19,450 for those without children.
Furthermore, to remain eligible for the EITC in the 2026 tax year, taxpayers must not have more than $12,200 in investment income.
This adjustment in the tax code is a welcome change for many families, as it provides greater financial relief during challenging economic times and enhances the opportunities for low- and moderate-income families to receive essential support through tax refunds.