The Earned Income Tax Credit (EITC) is a refundable US tax credit for low- and middle-income workers and families.

If the credit is larger than the tax owed, the worker receives the difference as a refund. The Additional Child Tax Credit works in a similar way for families.

A proposed draft 2026 IRS Form 1040 would ask filers to state whether they are a US citizen, US national, or an alien lawfully authorized to work in the US.

The Treasury Department says the question will keep ineligible people from claiming these credits. The administration says the change could save taxpayers up to $2 billion.

A research paper estimated 671,000 people, including 309,000 children, would lose the Earned Income Tax Credit under the proposal.

Groups that could lose eligibility include people with DACA status, temporary protected status holders and temporary workers on H-1B visas. The credits aim to reward work and reduce poverty. Economists say refundable credits are among the most effective anti-poverty tools in the US tax code.