ARRA and the Earned Income Tax Credit
Update Oct. 31, 2011 — This page has been updated to reflect the fact that the EITC changes under ARRA, which were to expire at the end of 2010, were extended through December 2012 by the Tax Relief and Job Creation Act of 2010.
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. ARRA also increases the beginning point of the phaseout range for the credit for all married couples filing a joint return, regardless of the number of children. These changes applied to 2009 and 2010 tax returns under ARRA, and were extended by the Tax Relief and Job Creation Act of 2010 to apply to 2011 and 2012 tax returns.
The earned income tax credit is a refundable credit intended to help people who work but earn modest incomes. The credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.