Many low-income workers struggle in the current economy. Their wages stalled out in 2025, even as prices continue to rise. The Tax Cut for Workers Act (TCWA), introduced by Sen. Catherine Cortez Masto (D-NV) and Rep. Dwight Evans (D-PA), would increase wage subsidies for many, more than doubling the maximum earned income tax credit (EITC) for workers without children from $664 to $1,502 (Figure 1). The bill would also make the credit’s inflation adjustment more generous for all. Both would provide additional support to workers struggling to make ends meet.
The TCWA’s maximum EITC for workers without qualifying children—often called the childless EITC—would be the same in 2026 as it was in 2021 under the temporary expansion in the American Rescue Plan Act (ARPA), since the bill does not update the ARPA levels for inflation between 2021 and 2026. If it did, the maximum credit would be about $1,800 in 2026.
The bill would also expand eligibility for the childless EITC to cover more workers by reducing the minimum age of eligibility from 25 to 19 (18 if a former foster child/homeless youth, 24 if a full-time student) and allowing workers older than 64 to receive the credit.
TPC estimates that the bill would deliver $140 billion in benefits from fiscal years 2026 to 2035. About 27 million taxpayers (14.4 percent) would receive an average benefit of almost $450 in 2026. The benefits would be highly concentrated on people with incomes in the bottom 40 percent of the income distribution (lowest and second quintile) (Figure 2).
Of the 27 million taxpayers who would receive a larger credit in 2026 under the TCWA, roughly 12 million would benefit from the expanded childless EITC, receiving an additional $600 on average (see Table 1). Among the roughly 15 million taxpayers with children who would benefit from the revised inflation indexing, their EITC would increase by about $260 on average (see Table 1).
How would the new inflation adjustments work?
Like many tax provisions, EITC parameters are annually adjusted for inflation, so the credit grows as prices rise. As a result of the Tax Cuts and Jobs Act (TCJA), since 2018 most tax provisions, including the EITC, are adjusted using the chained consumer price index (chained CPI), a less generous but often viewed as more accurate measure of inflation than the previous measure used to adjust many parts of the tax system, the CPI-U.
TCWA would reinstate using the CPI-U to annually adjust all EITC parameters, effectively undoing for the EITC the TCJA indexing change that has been in effect for nearly a decade. This would go into effect in 2027 for the expanded childless EITC. For workers with children, the bill would use the CPI-U beginning in 2026.
TPC estimates that using the CPI-U to adjust the EITC instead of the chained-CPI would cost $60 billion over the ten-year budget window, slightly less than half the bill’s total cost.
Most of the TCWA’s benefits would go to low-income workers
A substantial share of the TCWA’s benefits would go to childless workers—most of whom are unmarried single filers—who have historically received little benefit from the safety net. One in eight single filers (12.3 percent) would receive a larger credit from the TCWA’s childless EITC expansion than under current law, mostly concentrated among the 20 percent of taxpayers with the lowest incomes (bottom quintile, not shown in table). Those who would benefit would see their credit increase by about $600, on average (Table 1).
Evidence suggests that many of the childless workers who would see the largest gains under the bill would be younger workers who are often just starting out and have a small financial cushion to weather unexpected emergencies. The expansion of the childless EITC in 2021 reduced financial hardship and helped younger workers keep up with rent or mortgage payments.
The bill’s more generous inflation adjustment would also help lower-income families and provide an immediate income boost to about one-third of families with children (30.6 percent), who would see their credit increase by $260, on average. Most (85 percent) of this additional benefit for working families with children would go to those families at the bottom of the income distribution (not shown in table).
As our TPC colleague Aparna Mathur explains, if policymakers want to help workers in today’s economy, they could consider targeted changes to the EITC, which evidence shows can put more money in the pockets of working families than costly policies like “no tax on tips” or “no tax on overtime,” which provide meager benefits to a small share of low-income workers. The TCWA represents one such targeted change.
