Tax Cut for Workers Act of 2025

The "Tax Cut for Workers Act of 2025" aims to significantly expand and make permanent certain modifications to the earned income tax credit (EITC) , particularly for individuals without qualifying children. This legislation seeks to enhance financial support for low- and moderate-income workers. Key changes for childless individuals include a substantial reduction in the minimum age requirement , generally from 25 to 19, with specific provisions for students (age 24) and qualified former foster or homeless youth (age 18). Additionally, the bill eliminates the previous maximum age limit of 65 for eligibility. The bill also proposes a significant increase in the credit and phaseout percentages for childless EITC recipients, effectively doubling the credit rate from 7.65% to 15.3%. Correspondingly, the earned income and phaseout amounts are substantially increased , allowing more income to qualify for the credit and extending the phaseout range. Furthermore, the legislation makes permanent the application of the EITC to U.S. possessions like Puerto Rico, American Samoa, and those with mirror code tax systems, removing previous temporary limitations. A new provision allows taxpayers to elect to use their prior year's earned income if it results in a higher credit for the current tax year, offering flexibility during periods of income fluctuation. These amendments are set to apply to taxable years beginning after December 31, 2025, and include updated inflation adjustments to ensure the credit's value keeps pace with economic changes.