Tax Cut for Workers Act of 2025

Key Points

• This bill would permanently double the Earned Income Tax Credit rate for workers without children, increasing it from 7.65% to 15.3%. This means significantly larger tax refunds for millions of low-wage workers who file taxes each year.
• The minimum age to claim the credit drops from 25 to 19 for most workers, to 18 for former foster youth and homeless youth, and to 24 for students. The maximum age cap of 65 is eliminated entirely, opening the credit to older workers for the first time.
• The bill more than doubles the earned income threshold for the full credit (from $4,220 to $9,820) and the phaseout amount (from $5,280 to $11,610), meaning workers can earn more and still qualify for a larger credit.
• Workers who experience a drop in income can elect to use their prior year's earnings to calculate the credit, protecting people who lose hours or take a pay cut from also losing their tax benefit.
• The bill permanently extends the Earned Income Tax Credit to U.S. territories including Puerto Rico, American Samoa, and possessions with mirror code tax systems. A temporary provision set to expire after 2025 would become permanent.
• All changes would take effect for tax years beginning after December 31, 2025, meaning workers would first see the benefits when filing their 2026 tax returns.