Lower-Income Workers: 5 Tax Breaks That Deliver the Biggest Refunds
Ours is a nation with a draconian income gap. Over the past four decades, the richest of the rich -- the 1% -- have rapidly increased their earnings, almost 27 times as fast as the income of the bottom 20% of earners, as reported by Inequality.org.
It is mathematically -- and by all other means -- impossible in a modern capitalist society for everyone to catapult to the 1%. There will always be lower-income workers -- and a great many of them. If you're on the lower-earning side of the spectrum, you know that getting any unexpected money borders on the heavenly. A tax refund may not be unexpected, but it can feel like a baby windfall when it hits.
What are some tax breaks that lower-income workers can take advantage of to see bigger refunds?
Check Out: 3 Ways Taxes Have Changed in the Last 20 Years -- and How It Benefits Middle-Class Filers
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This Isn't About Hunting for Write-Offs, It's About Searching for Credits
First, you have to think about this the right way. You have to think less about possible write-offs and more about tax credits for which you may be eligible.
"If you're a lower-income worker, getting a refund isn't really about hunting for write-offs," said Ruth White, former IRS auditor and co-founder of White Sands Tax Services. "It's more about figuring out which refundable credits you can actually get, since those can pay out even if you don't owe any income tax at all."
White likened a refund to a kind of trap door that only opens when you have enough refundable credits and withholding stacked, after subtracting whatever taxes you owe or old debts you carry.
"If the refundable credits are big enough, that trap door just swings open."
Do You Qualify for the 'King of Refunds'?
"A practical proxy is the earned income tax credit (EITC), because it targets wage and self-employment income and has clear caps," White said. "For the 2025 return filed in 2026, those caps run from $19,104 for a single worker with no qualifying child (or $26,214 married filing jointly) up to $61,555 for single or head of household with three or more qualifying children (or $68,675 married filing jointly."
White called the earned income tax credit "basically the king of refunds." It's as great as it gets because you can get a refund check even if your income tax is zero.
"For 2025, the max goes from $649 if you don't have any kids, up to $8,046 if you've got three or more," White said.
But wait, there's a catch -- or two.
"You have to keep your investment income under $11,950 to qualify, which is just another hoop to jump through," White said. "One thing a lot of people miss is that some married folks who live apart can sometimes claim the EITC under the 'considered unmarried' rules. That can fully change your refund, even if your paycheck stays the same."
You May Be Eligible for the Child Tax Credit
If the EITC is the king of refunds, the child tax credit (CTC) is its firstborn son. Pay close attention though, as some things have recently changed.
"Under the One Big Beautiful Bill (OBBB) changes affecting 2025 returns, the child tax credit is $2,200 per child under 17, and up to $1,700 can be refundable through the additional child tax credit," White said. "It's tied to earned income above $2,500, and the Internal Revenue Service now requires valid Social Security numbers to claim these child credits, which makes identity paperwork part of the refund story."
Additionally, if you qualify, this refund may take some time to hit your bank account.
"Also, if you claim EITC or ACTC, the IRS must hold the refund until mid-February under PATH rules, so 'fatter' can still mean 'later,'" White said.
The Premium Tax Credit -- and the 2026 Twist
Next up: the premium tax credit. Another potential refund fattener, but one with yet more caveats.
"The premium tax credit is refundable and reconciled on your return, so it can show up as a big April refund if you paid more out of pocket during the year, or as a repayment if your advance credit was too high," White explained. "Here's the 2026 twist: The temporary expansion that removed the 400% poverty cliff applied through 2025, and the new law changes how excess advance credits get repaid after 2025, which can make income swings more dangerous for refunds."
You must be discerning here and also understand that not every hyped-up tax break actually leads to lower-income folks getting bigger refunds.
"The child and dependent care credit, for example, usually isn't refundable, so it mostly helps families who actually owe income tax, not the ones who are just trying to cover rent," White said. "Even when Congress changes the rules, the lowest-income workers often don't see much extra cash."
Your Job Category May Be More Important Now
Here's where things start to get really interesting.
"One genuinely unusual 2026 angle is that your job category can now matter more," White said. "For 2025 through 2028, there's a new deduction for qualified tips (up to $25,000) and for qualified overtime (up to $12,500, or $25,000 married filing jointly), both with phase-outs starting at $150,000 of modified adjusted gross income (AGI)."
There Is More 'Work-Linked' Relief
It's a big year for tax changes thanks to the OBBB, signed on July 4, 2025.
"The One Big Beautiful Bill added more 'work-linked' relief, like deductions for tips and overtime," White said. "At the same time, it made some ID requirements stricter and changed how some health credits work. Supporters say it's all about helping workers and boosting paychecks, but critics claim that refundable credits like EITC and ACTC are still what really make refunds big, and the changes to health subsidies can actually cancel out those gains for people whose income isn't steady."
The IRS Doesn't Make This Easy
It's no surprise that the IRS doesn't make any of this easy. Break out your reading glasses because you're going to need to get up in front of some fine print.
"There is no single Internal Revenue Service line that says 'low income equals X dollars,'" White said. "Instead each benefit draws its own boundary, which is why a worker can sometimes be considered low income for one break and too high of an income for another break."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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