By situation
Earned income credit for self-employed workers
Freelancers, gig workers and small business owners can claim the credit on their net earnings. The figure that counts is not your gross receipts, and not quite your profit either.
Self-employed: your earned income for the EITC
Federal EITC 2025, 1 child
$4,328
| Self-employment tax | $3,391 |
| Earned income for the EITC | $22,304 |
| Half of the SE tax deducted | $1,696 |
Head of household; no other income. Social Security wage base not reached at these incomes.
For a self-employed worker, earned income for the credit is net earnings from self-employment: the net profit from Schedule C or Schedule F, minus the deduction for half of the self-employment tax computed on Schedule SE. The self-employment tax is 15.3% of 92.35% of net profit, so a net profit of $24,000 gives a tax of about $3,391, a deduction of $1,696, and earned income of $22,304. With one child, that is still on the plateau of the 2025 federal credit, $4,328. A worker who also has wages adds them. A net loss reduces earned income, and if the total is zero or less there is no credit. Statutory employees and members of the clergy follow special rules. The IRS looks closely at self-employment income on returns that claim the credit: keep records of receipts and expenses, since reporting income that was not earned to raise the credit can lead to a ban.
What does $1,000 more in wages do to your credit?
Change in the 2025 federal credit
+$0
| Credit now | $4,328 |
| With $1,000 more | $4,328 |
| Credit ends at | $50,434 |
IRS and state rules read by Radif Partners · Editorial policy · Method and sources
From receipts to earned income
- Add the gross receipts of the business for the year.
- Subtract the business expenses allowed on Schedule C: supplies, mileage or vehicle costs, phone, fees, part of a home office.
- The result is net profit. Multiply by 92.35%, then by 15.3%, for the self-employment tax on Schedule SE, if net earnings are at least $400.
- Subtract half of that tax: the result is your earned income from self-employment for the credit.
The tool above does steps 3 and 4. It assumes no wages above the Social Security wage base, which is never reached at these incomes.
Examples for 2025
| Net profit | SE tax | Earned income | Credit, 1 child | Credit, 2 children |
|---|---|---|---|---|
| $8,000 | $1,130 | $7,435 | $2,525 | $2,970 |
| $14,000 | $1,978 | $13,011 | $4,328 | $5,210 |
| $20,000 | $2,826 | $18,587 | $4,328 | $7,152 |
| $26,000 | $3,674 | $24,163 | $4,196 | $6,978 |
| $32,000 | $4,521 | $29,739 | $3,309 | $5,809 |
| $40,000 | $5,652 | $37,174 | $2,119 | $4,240 |
Records the IRS may ask for
When it reviews a claim with self-employment income, the IRS may ask for proof that the business exists and of its receipts and expenses: bank statements, invoices, platform statements, a mileage log. The IRS page on earned income lists what counts. A worker paid in cash should keep a dated record of each payment. The page on denied claims explains what happens after a review.
Wages and a business together
Wages and net earnings add up. A worker with $12,000 of wages and a side business with a net loss of $3,000 has $9,000 of earned income: the loss reduces the total. The credit is then computed on the combined figure and on AGI, as for anyone else.