Earned Income Tax Credit (EITC)

What is it?
The earned income tax credit (EITC) is a credit for lower income workers. To offset payroll taxes and encourage work, the credit reduces the amount of tax owed (if any) so you end up paying less tax and may even be entitled to a refund.

What's changing?
The earned income tax credit is simplified by changing calculations and definitions of certain terms, including earned income and foster child. The phase-out range is increased by $1,000 for married couples from 2002-2004, by $2,000 from 2005-2007, and by $3,000 from 2008 and after.

What does it mean to me?
The change means more low-income married couples will be eligible for the credit, providing them with tax reductions or refunds.