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The Earned Income Tax Credit was enacted during the Ford administration by the Tax Reduction Act of 1975, and substantially expanded during the Reagan administration by the Tax Reform Act of 1986. Its goals were in part to offset the burden of Social Security taxes and to provide an incentive to work. The EITC is a refundable tax credit, which offsets income tax owed by low-income taxpayers. Refundable tax credits can be used to reduce a taxpayer's tax liability to zero. Any excess of the credit beyond the tax liability can be refunded to the taxpayers.

Synonyms: EITC
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