(The Center Square) – As Republicans work to draft tax legislation for the 2025 federal budget package, lawmakers have introduced bipartisan legislation to eliminate the age cap on eligibility for the earned-income tax credit.
The bill, introduced Tuesday by Reps. Mike Carey, R-Ohio, and Danny Davis, D-Ill., would expand eligibility for the Earned Income Tax Credit to workers over the age of 65. Currently, only workers between the ages of 25 and 65 may claim the credit.
“America’s workforce has changed since the EITC was established in 1975. Many Americans are working longer, and a rising retirement age should be reflected in the program,” Carey said. “Certain Americans should not be prevented from accessing critical tax provisions because of their age.”
Worker advocacy organizations including Golden State Opportunity and the Critical Labor Coalition have endorsed the bill, with Misty Chally from CLC saying the legislation “encourages those with experience and a strong work ethic to reenter the workforce at a time when employers need them the most.”
But tax policy experts have raised concerns that expanding the EITC, which is 95% spending outlays, is a fiscally risky move, particularly as Congress plans to spend trillions expanding other Trump-era tax policies.
Adam Michel, director of tax policy studies at the Cato Institute, told The Center Square Wednesday that the “countervailing incentives” of the EITC, coupled with the cost of the program, “lead to ambiguous total economic effects.”
“The EITC is usually described as creating an incentive to work, however, as the credit phases out it also disincentivizes additional work hours and the pursuit of higher-paying jobs,” Michel said. “Rather than expanding the credit, Congress should repeal it in favor of lower tax rates for everyone.”
