H.R. 2764: Tax Cut for Workers Act of 2025 (119th Congress) Bill Summary

This bill, titled the Tax Cut for Workers Act of 2025, aims to make significant changes to the Earned Income Tax Credit (EITC) as detailed in the Internal Revenue Code. Below are the key elements of the bill:

Permanent Changes to the Earned Income Credit for Individuals without Qualifying Children

Minimum Age Reduction: The bill proposes to lower the minimum age for individuals to qualify for the EITC from 25 to 19. For students, the age limit is set to 24, while for qualified former foster youths and qualified homeless youths, the age limit is 18.
Removal of Maximum Age: The bill eliminates the existing maximum age limitation that prevents individuals over age 65 from claiming the EITC.
Increase in Credit Rates: The percentage of the credit will increase from 7.65% to 15.3% in the calculations involving earned income.
Increase in Income Limits: The earned income thresholds for claiming the credit will also rise, changing from $4,220 to $9,820, and from $5,280 to $11,610 for single and married individuals, respectively.

Inflation Adjustments

The bill mandates that certain dollar amounts related to the EITC will be adjusted for inflation in future tax years, ensuring that the benefits of the tax credit will keep pace with changes in the cost of living.

Impact on U.S. Territories

The bill will apply the EITC more broadly to residents of U.S. territories, including Puerto Rico and American Samoa, removing previous limitations that restricted its application to these areas for certain calendar years.

Election to Use Prior Year Earned Income

Taxpayers will have the option to use their prior year's earned income if their current year income is lower. This change is intended to benefit those who may face income fluctuations from year to year, giving them greater stability in the amount of tax credits they can claim.