Which U.S. tax credit was created in 1975 to supplement the wages of low- and moderate-income workers?
Answer
Earned Income Tax Credit
The U.S. tax credit created in 1975 to supplement low- and moderate-income workers’ wages was the Earned Income Tax Credit.
Congress created the Earned Income Tax Credit, or EITC, through the Tax Reduction Act of 1975. It was intended to offset Social Security payroll taxes and encourage employment by providing a refundable credit linked to earned income.
Because the credit is refundable, an eligible taxpayer can receive a payment even when the credit exceeds their federal income-tax liability. The amount depends on factors including earned income, filing status, and qualifying children. The EITC is separate from the Child Tax Credit, although some taxpayers may qualify for both.