Back to all bills
Standard Summary
Comprehensive overview in 1-2 paragraphs
The EITC Lookback Act would add a permanent option to compute the Earned Income Credit (EITC) by allowing taxpayers to use their prior-year earned income in place of their current-year earned income for the purpose of determining the credit, but only if the taxpayer’s current-year earned income is lower than the prior year’s. Taxpayers would be able to elect this lookback on their return. The change would apply to taxable years beginning after December 31, 2024, making the lookback a permanent feature of the EITC calculation. The intent is to reduce EITC volatility for families whose earnings fluctuate from year to year.
Key Points
- 1Lookback mechanism: If a taxpayer’s current-year earned income is less than their prior-year earned income, the EITC can be calculated using the prior year’s earned income instead of the current year’s, at the taxpayer’s election.
- 2Optional election: The taxpayer must elect to use the lookback; it is not automatic.
- 3Scope: Applies specifically to the Earned Income Credit under Section 32 of the Internal Revenue Code.
- 4Effective date: Applies to taxable years beginning after December 31, 2024.
- 5Policy purpose: Aims to stabilize EITC benefits for workers with fluctuating or seasonal earnings, reducing abrupt drops in credit due to income volatility.
Impact Areas
Primary group/area affected: Low- and moderate-income workers who claim the EITC and experience income fluctuations between years (e.g., seasonal workers, gig/contract workers, and others with variable earnings).Secondary group/area affected: Taxpayers who anticipate lower current-year earnings than the previous year and might benefit from a higher or more stable EITC count due to lookback; tax preparers and IRS staff who administer the EITC may face new election processing and guidance needs.Additional impacts: Possible changes in refund timing or size for some filers, potential administrative and compliance considerations for IRS form and instruction updates, and a broader funding/revenue impact depending on how many taxpayers elect the lookback and how it affects overall EITC outlays.
Generated by gpt-5-nano on Nov 18, 2025