The Earned Income Credit in 2026: What an Extra $1,000 of Pay Really Keeps

The earned income credit is paid to people who work, and its size depends on how much they earn, so it is the one credit where earning more can look like it backfires. It rises with each dollar earned, stays at its maximum for a stretch, then shrinks. For 2026 the maximum is $4,427 with one qualifying child, $7,316 with two, $8,231 with three or more and $664 with none (IRS Revenue Procedure 2025-32, section 3.06). This guide works out, with the same engine as the Paycheck Calculator, how much of an extra $1,000 of pay a worker actually keeps at each income, because that is where the credit's shape matters.

The credit has three stretches

The statute sets a percentage for each family size (26 U.S.C. § 32(b)(1)): the credit starts at 34% of earnings with one child, 40% with two and 45% with three or more (7.65% with none). That is the rising stretch: each dollar of earnings adds that many cents of credit, until earnings reach the “earned income amount”: $13,020 with one child, $18,290 with two or more, $8,680 with none. Then comes the plateau, where the credit is the maximum: it holds until income (the larger of adjusted gross income and earned income) passes the “threshold phase-out amount”, $23,890 for single and head of household filers with children ($31,160 for a joint return). Past it, the phase-out takes 15.98 cents of credit per dollar with one child, 21.06 cents with two or more and 7.65 cents with none, until the credit reaches zero at the “completed phase-out amount”:

The maximum is the percentage times the earned income amount (for one child, 34% of $13,020 is $4,427) and the end point is where the phase-out has taken all of it back. The IRS prints the 2026 amounts in Revenue Procedure 2025-32; the joint-return figures are higher because the statute adds $5,000 (indexed) to the phase-out amount on a joint return. In practice the IRS gives filers a lookup table with the credit for each $50 of income (the “EIC Table” in the Form 1040 instructions) instead of the formula, and the credit on the return is the table's figure.

The credit at each income

For a worker whose only income is one paycheck (the standard deduction, no other income, no pre-tax deductions), the credit at different wages:

Bold is the maximum. The no-child credit is small and ends early: it never exceeds $664, and a single worker without a child is not eligible at all at $20,000. Each added child raises the peak and moves the end point up the income scale, and a joint return gets $7,270 more room before it starts to shrink.

What an extra $1,000 of pay keeps

This is the number that matters if you are deciding on overtime or a second job. For each $1,000 more of wages, the table shows what is left after Social Security and Medicare tax and federal income tax, counting the credit as part of what you keep (it arrives as a refund when you file). The second figure for each family is the same thing with no earned income credit, to show what the credit itself does. The child tax credit is not counted here, so the earned income credit's own effect is visible, and the state is Texas, which has no income tax:

Read each row against the credit table above. In the rising stretch (a head of household with one child up to $13,020) the figure is more than $1,000: the credit pays 34 cents on top of each dollar earned, more than the 7.65 cents of payroll tax. On the plateau it is $924, only the payroll tax, because the standard deduction ($24,150 for a head of household) leaves no income tax to pay. In the phase-out it drops to about $664 with one child and $613 with two, which is 7.65% payroll tax, plus 10% income tax, plus the credit's 15.98 or 21.06 cents. At no point in the table does extra pay leave you with less money; the highest combined rate over the whole range is about 36% for the one-child head of household and 41% for the two-child one.

Why a pre-tax 401(k) contribution can be worth more than the tax saved

The credit is figured on the wages on Form 1040 line 1a, which is the amount after traditional 401(k) deferrals and pre-tax benefits, so a deferral can move a worker back toward the maximum. Head of household, one child, $30,000 of wages: the credit is $3,447. With a $5,000 traditional 401(k) deferral the wages on the return are $25,000, the credit is $4,246, which is $799 more, in addition to the income tax the deferral saves. A Roth contribution does not do this, because it does not lower wages. (The deferral is also less take-home pay now; whether it is worth it depends on whether the money is needed. This is only how the credit responds.)

The rules that decide whether you get it at all

The size is the easy part. The credit has 15 rules in IRS Publication 596, and the ones that most often decide it are:

• Earned income and a Social Security number. You need wages or self-employment earnings, and you (and your spouse on a joint return) and each child counted need a Social Security number valid for work, issued by the return's due date. Without one for the child you may still get the smaller childless credit if you meet its rules.
• Investment income of no more than $12,200 (interest, dividends, capital gains, royalties, and certain rental and passive income; Publication 596, Worksheet 1). One dollar over removes the whole credit (26 U.S.C. § 32(i); Revenue Procedure 2025-32, section 3.06(2)).
• A qualifying child is your child, stepchild, foster child, grandchild, sibling, or a descendant of one of them, who lived with you in the United States more than half the year, and who is under 19 (under 24 if a full-time student, any age if permanently and totally disabled) and younger than you. This is a different test from the child tax credit's under-17 rule, so a 17- or 18-year-old can bring the earned income credit but not the $2,200 credit.
• No child: you (or your spouse) must be 25 to 64 at the end of the year, with your home in the U.S. more than half of it, and nobody can claim you as a dependent.
• Filing status: married people generally need to file jointly (there is a special rule for separated spouses with a child), and filers of Form 2555 and some nonresident aliens are excluded.
• Income figures: the credit uses your earned income, and your adjusted gross income if it is larger; where AGI is above the threshold, the worksheet takes the smaller of the credit for earned income and the credit for AGI, so interest or unemployment income can reduce it.

What this leaves out

The tables count one earner with wages, the standard deduction and no other income. They do not include the child tax credit (which most of these families also receive: see the child tax credit guide), the child and dependent care credit, state credits (many states add their own), or the effect of benefits such as SNAP, Medicaid or housing assistance that also change with income, which in some places make the total marginal rate far higher than the federal figures here. The IRS's 2026 EIC Table and the 2026 forms are not published yet; the figures follow the 2025 table's method with the 2026 amounts from the Revenue Procedure, so the amount on a return can differ by a few dollars. The tie-breaker rules when more than one relative could claim a child, married filing separately and the special cases (clergy, statutory employees, nontaxable combat pay) are in Publication 596.