By situation
Investment income limit for the earned income credit
The earned income credit has a hard limit on income from savings and property. Unlike the income limit, it works like a switch.
Does your investment income block the credit?
Federal limit for 2025: $11,950
Under the limit
| Your investment income | $4,000 |
| Room left | $7,950 |
| Missouri limit, 2025 | $4,400 |
One dollar over the limit removes the whole federal credit.
To claim the earned income credit, your investment income for the year must not exceed $11,950 for 2025, under Rev. Proc. 2024-40, and $12,200 for 2026, under Rev. Proc. 2025-32. Investment income includes taxable and tax-exempt interest, ordinary dividends, capital gain net income, net income from rents and royalties not earned in a business, and net passive income. The limit is a cliff: with $11,950 of investment income a family with two children can receive the full $7,152 for 2025, but with one dollar more it receives nothing, whatever its earned income. That makes the timing of a sale of stock or a property worth checking for a household near the limit. Missouri sets a lower limit of its own for its state credit, $4,400 for 2025. Investment income also counts in AGI.
The federal credit at your income, by number of children
Federal EITC 2025, $22,000 earned, 2 children
$7,152
| No qualifying child | $0 |
| 1 child | $4,328 |
| 3 or more children | $8,046 |
Without a child, you or your spouse must be 25 to 64 at year end.
IRS and state rules read by Radif Partners · Editorial policy · Method and sources
What counts and what does not
| Counts toward the limit | Does not count |
|---|---|
| Taxable interest | Wages, tips, self-employment income |
| Tax-exempt interest | Distributions from an IRA or 401(k) |
| Ordinary dividends | Social Security and unemployment benefits |
| Capital gain net income | Gain excluded on the sale of a main home |
| Net rents and royalties (not a business) | Pension and annuity payments |
| Net passive activity income | Child support and gifts |
Using the worksheet
Publication 596 gives a worksheet that adds the lines of your return: the tax-exempt and taxable interest, the ordinary dividends and the capital gain shown on Form 1040, and the net income from Schedule E for rents, royalties and passive activities. If the total is $11,950 or less for 2025, you pass. The mini-tool above does the comparison for each year.
Close to the limit
Because the limit is a cliff, a few hundred dollars can decide a credit of several thousand. A household that plans to sell shares at a gain may want to look at the year of the sale. The limit is indexed for inflation each year, so it rises a little, $250 from 2025 to 2026. The law sets it in section 32(i).
States
Every state credit that starts from the federal amount inherits the federal limit. Missouri is stricter for its Working Family Tax Credit, with $4,400 for 2025, and Minnesota applies its own figure, the same as the federal one for 2025. The calculator applies the right limit for your state when you open its details and enter your investment income.