S1372-119

What This Bill Does

The Tax Cut for Workers Act of 2025 expands and makes permanent the Earned Income Tax Credit (EITC) for low-income workers, particularly those without children. It removes the temporary nature of EITC enhancements that were set to expire, lowering the minimum age to claim the credit and significantly increasing the credit amounts for childless workers.

Who Benefits and How

Low-income workers without qualifying children are the primary beneficiaries. The bill lowers the minimum age to claim the credit from 25 to 19 (or 18 for former foster youth and homeless youth), opening eligibility to younger workers. It also removes the upper age limit of 65, allowing older workers to continue claiming the credit. The credit rate doubles from 7.65% to 15.3%, and income thresholds increase substantially (e.g., from $4,220 to $9,820), resulting in significantly larger tax refunds for eligible workers.

Former foster youth and homeless youth receive special consideration, with eligibility starting at age 18 rather than 19, recognizing their unique circumstances.

Workers in U.S. territories (Puerto Rico, Guam, Virgin Islands, American Samoa, and the Northern Mariana Islands) benefit from the permanent extension of EITC provisions that were previously temporary.

Workers with fluctuating incomes gain the option to use their prior year's earned income when calculating the credit, protecting their benefit if their income temporarily drops.

Who Bears the Burden and How

The federal government bears the cost through reduced tax revenue, as significantly more workers will qualify for larger credits. No specific funding offset or revenue source is identified in the bill.

No specific private sector groups are identified as bearing direct costs or new compliance burdens under this legislation.

Key Provisions

• Lowers minimum age: Workers as young as 19 (or 18 for former foster youth and homeless youth) can claim the EITC, down from age 25
• Removes upper age limit: Eliminates the age 65 cutoff, allowing older workers to continue receiving the credit
• Doubles the credit rate: Increases from 7.65% to 15.3% for workers without qualifying children
• Raises income thresholds: Earned income threshold increases from $4,220 to $9,820, and phase-out threshold from $5,280 to $11,610
• Makes territorial provisions permanent: Extends EITC to U.S. territories beyond the 2021-2025 temporary period
• Prior year income election: Allows workers to use prior year earnings if current year income is lower
• Inflation adjustments: All dollar amounts will be adjusted annually for inflation