Tax Credits You Should Know About — Tax Year 2025 and Earlier

News:

Claim all tax credits that you qualify for

You may be leaving money on the table when it comes to taxes and tax refunds! These tax credits can be very helpful to low-income taxpayers. Check to see if you qualify for this money.

Earned Income Credit (EIC)
- The Earned Income Credit (EIC) for low-income taxpayers keeps growing. The maximum credit is over $8,000. That can be money in your pocket!
- The IRS reports that millions of households are not claiming tax credits they qualify to get. So don't forget to claim this credit if you are eligible.
- Find out how much you can get from the Earned Income Credit now.
- Read more about the federal and Vermont Earned Income Credits below.
Child Tax Credit
- The Child Tax Credit is worth up to $2,200 for each child under age 17.
- You must earn at least $2,500 in taxable income to be eligible.
- If the amount of your Child Tax Credit is greater than the amount of income tax you owe, you may be able to get an additional refund.
- Read more about the Federal Child Tax Credit.
- Read more about the Vermont Child Tax Credit.
Child and Dependent Care Tax Credit
- This credit is offered by both the state and federal governments. You can get credit only for part of your total child care costs, and there are caps. But the state credit is "refundable," meaning that you can claim it even if you pay little or no taxes.
- Read more about the Federal Child and Dependent Care Credit
- Read more about the Vermont Child and Dependent Care Tax Credit
Educational Tax Credits
- The American Opportunity Tax Credit can be worth as much as $2,500 each year for students who are in their first four years of college.
  - The credit is for tuition, educational materials, and some other expenses if required for enrollment. See the IRS website for more information about what expenses qualify.
  - You must meet certain income requirements to qualify for the American Opportunity Tax Credit. However, you may be eligible for a partial refund of up to $1,000 even if you do not owe taxes. Immigrants who are residents may also claim this credit.
  - For more information, see the IRS website.
- Students who don’t qualify for the American Opportunity Tax Credit may be eligible for the Lifetime Learning Credit.
  - This credit is worth up to $2,000 per tax return. It can reduce the tax you owe. For more information, see the IRS website.
Vermont Renter Credit
- If you rent, apply for Vermont’s Renter Credit tax credit.
Vermont Property Tax Credit
- Don't miss out on potential help from the state to pay your property taxes.

Three-year deadline to get these credits

If you qualify for any of these tax credits, you have three years to file the proper tax forms. That's three years from the date the return is normally due.

Ask for help from a free tax preparer during tax season each year. Or use free tax filing tools.

The Earned Income Credit

It may be worth your time to see if you qualify for this money. Be sure to read about the rules and ask questions before you claim this credit on your federal tax form. You may get audited, so you need to be sure you qualify.

The Earned Income Credit (EIC or EITC) is a refundable tax credit for workers with lower incomes. “Refundable” credit means that if your credit is more than the taxes you owe, the IRS pays you money at tax time. If you qualify for an EIC, the IRS will pay you money even if you don't owe any taxes.

If you have a child, you may qualify for the Earned Income Credit and the Child Tax Credit. (The EIC is not the same as the Child Tax Credit.) Very low-income people without children may also qualify for the Earned Income Credit.

If your credit is less than the taxes you owe, the EIC can lower the amount you have to pay. Or the EIC may mean that you do not have to pay any taxes at tax time.

EIC rules for everyone

To claim the EIC, you must pass these tests:

You must have earned income.* (See below to find out what counts and what does not count as earned income.)
For tax year 2025, your earned income must have been less than:
- $19,104 if you do not have a qualifying child ($26,214 if married filing jointly)
- $50,434 if you have one qualifying child ($57,554 if married filing jointly)
- $57,310 if you have two qualifying children ($64,430 if married filing jointly)
- $61,555 if you have three or more qualifying children ($68,675 if married filing jointly)
- Taxpayers claiming the EIC who file Married Filing Separately must meet the eligibility requirements under the special rule in the American Rescue Plan Act (ARPA) of 2021.
For tax year 2024, your earned income must have been less than:
- $18,591 if you do not have a qualifying child ($25,511 if married filing jointly)
- $49,084 if you have one qualifying child ($56,004 if married filing jointly)
- $55.768 if you have two qualifying children ($62,688 if married filing jointly)
- $59,899 if you have three or more qualifying children ($66,819 if married filing jointly)
- Taxpayers claiming the EIC who file Married Filing Separately must meet the eligibility requirements under the special rule in the American Rescue Plan Act (ARPA) of 2021.
For 2023, your earned income must have been less than:
- $17,640 if you do not have a qualifying child ($24,210 if married filing jointly)
- $46,560 if you have one qualifying child ($53,120 if married filing jointly)
- $52,918 if you have two qualifying children ($59,478 if married filing jointly)
- $56,838 if you have three or more qualifying children ($63,398 if married filing jointly)
- Taxpayers claiming the EIC who file Married Filing Separately must meet the eligibility requirements under the special rule in the American Rescue Plan Act (ARPA) of 2021.
For 2022, your earned income must have been less than:
- $16,480 if you do not have a qualifying child ($22,610 if married filing jointly)
- $43,492 if you have one qualifying child ($49,622 if married filing jointly)
- $49,399 if you have two qualifying children ($55,529 if married filing jointly)
- $53,057 if you have three or more qualifying children ($59,187 if married filing jointly)
- Taxpayers claiming the EIC who file Married Filing Separately must meet the eligibility requirements under the special rule in the American Rescue Plan Act (ARPA) of 2021.
You must be a U.S. citizen or resident alien all year.
You cannot file form 2555 or form 2555-EZ (relating to foreign earned income).
Your income from investment must be $11,950 or less.

*Earned income is income you receive as pay for work you perform. For example:

salary
wages
tips
professional fees and
income from self-employment

Earned income is not:

child support
Reach Up benefits
other types of public benefits (such as SSI and SS disability benefits)
unemployment compensation

Rules if you have a qualifying child

If you have a qualifying child, you can get a bigger credit. A qualifying child:

must meet the age, relationship, and residency tests (see below)
cannot be used by more than one person to claim the EIC. However, the parent the child lives with for more than half of the year can claim the EIC even if the other parent can claim the child as a dependent.
cannot be a qualifying child of another person

Relationship test

The child must be your child, brother, sister, stepbrother, stepsister, or a descendant of one of these relatives (niece, nephew, grandchild). Child includes your children by blood, marriage, and court order. Adopted children and foster children are included in the definition of "child."

Age test

Your child must be:

Under age 19 at the end of the year, or
Under age 24 at the end of the year, if a full-time student or
Any age, if permanently and totally disabled

Residency test

Your child must have lived with you in the United States for more than half of the year. "In the United States" means in one of the 50 states or the District of Columbia. Your child no longer needs a Social Security number to get this credit.

If you do not have a qualifying child

Individuals who have very low incomes and who do not have a qualifying child may be able to get EIC. To get EIC, you:

must be a least age 25 and under age 65
cannot be the dependent of another person
cannot be a qualifying child of another person
must have lived in the United States more than half of the year.

How much is the EIC?

The EIC depends on your adjusted gross income and how many qualifying children you have.

For tax year 2025, the maximum amounts of the EIC are:

$649 for a taxpayer with no qualifying child
$4,328 for a taxpayer with one qualifying child
$7,152 for a taxpayer with two qualifying children
$8,046 for a taxpayer with three or more qualifying children

For tax year 2024, the maximum amounts of the EIC are:

$632 for a taxpayer with no qualifying child
$4,213 for a taxpayer with one qualifying child
$6,960 for a taxpayer with two qualifying children
$7,830 for a taxpayer with three or more qualifying children

For tax year 2023, the maximum amounts of the EIC are:

$600 for a taxpayer with no qualifying child
$3,995 for a taxpayer with one qualifying child
$6,604 for a taxpayer with two qualifying children
$7,430 for a taxpayer with three or more qualifying children

For tax year 2022, the maximum amounts of the EIC were:

$560 for a taxpayer with no qualifying child
$3,733 for a taxpayer with one qualifying child
$6,164 for a taxpayer with two qualifying children
$6,935 for a taxpayer with three or more qualifying children

How much EIC am I eligible for?

Get an estimate of the amount you could get from the Earned Income Credit now! It's easy.

Common questions

We often hear these questions:

My children live with me, but their other parent claims them for the EIC. The person who did my taxes says that I can't claim the EIC. Is this true?

No, it is not true. You can and should claim the EIC. Only the parent who has "primary residence" of the children may claim them as qualifying children for EIC.

Even if the other parent pays child support and claims the children as dependents, the other parent cannot claim the children for EIC if they live with you most of the time.

Claiming the EIC when the other parent claims it will lead to an audit of your tax return. The audit will give you the chance to prove that you are eligible to claim the EIC.

Contact us for help with your audit. Fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont. You can also call us at 1-800-889-2047.
My children live with me, but I've agreed that their other parent can claim the EIC every other year. Is this a problem?

Yes. Only the parent with whom the children live for more than one-half the year may claim the EIC for those children.

Federal law does not allow parents to "take turns" claiming the EIC unless the child actually changes where they live each year. When a non-custodial parent (the parent the children don’t live with) claims the EIC for “household with children,” that parent may face big penalties and may have to pay back all EIC amounts that shouldn’t have been claimed.

If you agree that the other parent can claim the EIC, even though the children live mainly with you, you are helping the other parent to violate the tax code. You may also face IRS penalties.

Vermont Earned Income Tax Credit

If you qualify for and receive an EIC from the IRS, you will also qualify for a Vermont Earned Income Tax Credit. See what's new for this year's Vermont EIC.

Many families who get the EIC automatically qualify for 3SquaresVT (food stamps). You just have to apply.

For help, call the Department for Children and Families at 1-800-479-6151.

People who can help you file for the EIC

Call 2-1-1 to find a free volunteer income tax preparer. Visit our Tax Filing Help page to learn about your options for free help.

Has the IRS asked you about an audit or exam on the EIC?

The IRS can audit your tax return for up to three years from the date you originally filed the return. The IRS usually does this by sending you a letter that asks you send them proof that you were eligible to claim the EIC.

Generally they ask you to prove that you are related to the child (relationship test), and also prove the child lived with you for over half of the year (residency). The best way to prove this is to provide copies of the child’s birth certificates or formal adoption papers. Also provide a letter from the child’s school and doctor’s office stating the address that they have on record for the child in the year in question.

If you get a letter from the IRS asking you to prove an EIC claim, contact us for help with your audit. Fill out our form and we will call you back. Your information will be sent to Legal Services Vermont, which screens requests for help for both Vermont Legal Aid and Legal Services Vermont. You can also call us at 1-800-889-2047.

More resources

Visit these web pages to get more information:

For more information about EIC, watch the video below. Vermont Legal Aid Staff Attorney Zachary Lees led a panel presentation about the Earned Income Tax Credit in January 2019. You can watch the video on YouTube.

Original Source: Pine Tree Legal Assistance
Adapted and updated by VTLawHelp.org