What type of income is generally considered for the EITC?

The Earned Income Tax Credit (EITC) is specifically designed to provide tax relief and financial support to low-to-moderate-income workers, which primarily involves considering earned income. Earned income encompasses wages, salaries, tips, and net earnings from self-employment. The fundamental purpose of the EITC is to incentivize work and support those who are actively engaged in the labor force; hence, it is focused exclusively on income that is derived from employment or self-employment activities.

In contrast, other forms of income, such as investment income, rental income, or unearned income from trust funds, do not qualify for the EITC as they do not represent active participation in the workforce. Furthermore, inheritances and gifts are not considered earned income since they do not arise from the individual's efforts in a job or business, which is a key requirement for EITC eligibility.