What is the main purpose of the Earned Income Tax Credit (EITC)?

The main purpose of the Earned Income Tax Credit (EITC) is to enhance the income of lower-income workers. This refundable federal tax credit is specifically designed to encourage and support working individuals and families who earn low to moderate incomes. By providing a financial boost, the EITC helps to reduce poverty and incentivizes employment, allowing recipients to retain more of their hard-earned money. The design of the EITC recognizes that many working families struggle to make ends meet due to their income levels, and the credit aims to provide relief by effectively increasing their take-home pay.

This focus on low-income workers distinguishes the EITC from other potential incentives or credits aimed at business investments, education expenses, or retirement savings, which do not specifically target the earned income of individuals or families in the same way.