CHECKS worth thousands could be sent out to Americans so long as they meet several criteria.
The direct payment comes thanks to the “inflation adjustment” rule from the Internal Revenue Service (IRS).
Select taxpayers will see an increase in earned income credit for 2025 (stock image)[/caption]
The bonus comes as the IRS adjusts for inflation rates (stock image)[/caption]
Adjustments to account for inflation in the 2025 tax year were confirmed in a press release on Tuesday.
Changes will impact residents when they file their returns in early 2026.
Among the list of the IRS’s inflation adjustments was the earned income tax credit.
Earned income tax credit (EITC) is a refundable credit that assists low and moderate-income single Americans or married couples, especially those with children.
There are typically a few essential requirements to earn EITC.
For the latest 2023 tax returns, there were six to meet.
CRUCIAL CRITERIA
They included earned annual income of no more than $63,398 and an investment income of less than $11,000.
Filers must’ve also had a valid Social Security number by the final date for 2023 returns.
Additionally, they must have been a U.S. citizen or resident alien for the entirety of the year, have not filed a Foreign Earned Income form, and must’ve met certain rules if they separated from their spouse.
Similar qualifications will likely be in place for the 2025 tax year, with slight changes in the income and investment income amount requirements.
ADDED CONSIDERATION
Those who meet the six requirements and have the seventh of having three or more children they claim as dependents could earn $8,046 in EITC thanks to the inflation adjustment.
The IRS noted the amount as a significant increase from $7,830 for the 2024 tax year.
It’s a total difference of $216.
Americans can see that $8,046 check or direct deposit around the same time they would get their return for the 2025 tax year.
CPI and Inflation explained
The Consumer Price Index is how the federal government measures inflation.
Every month, the Bureau of Labor Statistics shares its CPI numbers with detailed breakdowns of which items have changing prices.
The CPI shows the amount prices rose or fell over the previous 12 months.
The calculation process is complex, but measures the changes in price for urban consumers, those living or working in an American metropolitan area.
While that does not cover everyone, it measures prices for about 90% of the population.
Amounts for qualifying single filers and those with fewer or more dependents will also see an increase.
MORE, PLEASE
Several other categories increased due to the inflation adjustment for the 2025 tax year.
Alternative minimum tax exemption amounts, qualified transportation fringe benefits, health flexible spending cafeteria plans, medical savings accounts, foreign earned income exclusion, estate tax credits, annual exclusion for gifts, and adoption credits saw positive changes.
The only unchanged areas included personal exemptions, itemized deductions, and lifetime learning credits.
More details regarding amounts and other information can be found on the IRS website.
There are also at least six ways to file taxes for free.
Some taxpayers can also claim a piece of a $14.95 million pot from a “privacy” settlement.
