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Earned Income Tax Credit (EITC)

A refundable tax credit for working people with low to moderate income, designed to provide financial relief and encourage employment. A 'refundable' credit means you can get money back even if you don't owe any taxes.

Internal Revenue Code of 1986

The main body of tax laws in the United States, which outlines how federal taxes are calculated, collected, and enforced.

Phaseout

The process by which a tax credit or benefit gradually decreases as a person's income rises above a certain threshold, eventually disappearing entirely.

Taxable Year

The annual accounting period for which an individual or business files an income tax return, typically the calendar year (January 1 to December 31).

Inflation Adjustment

A process of increasing or decreasing monetary amounts (like tax credit values or income thresholds) to account for changes in the cost of living over time, ensuring their purchasing power remains consistent.