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TITLE 26-INTERNAL REVENUE CODE (d) Certain persons not eligible This section shall not apply to any estate or trust, nor shall it apply to any nonresident alien individual. (Added Pub. L. 94-12, title II, § 203(a), Mar. 29, 1975, 89 Stat. 29, and amended Pub. L. 94-164, § 3(a)(1), Dec. 23, 1975, 89 Stat. 972; Pub. L. 94- 455, title IV, § 401(a)(2)(A), (B), title V, §503(b)(4), title XIX, § 1906(b)(13)(A), Oct. 4, 1976, 90 Stat. 1555, 1562, 1834.) PRIOR PROVISIONS A prior section 42 was renumbered section 45 of this title. AMENDMENTS 1976-Pub. L. 94-455, §401(a)(2)(A), substituted "General tax" for "Taxable income" in section catch- line. Subsec. (a). Pub. L. 94-455, §401(a)(2)(A), among other changes, eliminated provisions relating to the application of the six-month rule. Subsec. (b)(2). Pub, L. 94-455, § 503(b)(4), substituted "credit for the elderly" for "retirement income". Subsee. (c)(1). Pub. L. 94-455, § 401(a)(2)(B), substi- tuted "paragraph (1)" for "paragraph (1)(A)" in subpar. (A) and "paragraph (2)" for "paragraph (1)(B)" in subpar. (B). Subsec. (c)(2). Pub. L. 94-455, § 1906(b)(13)(A), struck out "or his delegate" following "Secretary". 1975-Subsec. (a). Pub. L. 94-164 redesignated exist- ing provisions as par. (1), and in par. (1) as so redesig- nated substituted provisions for determination of amount allowable as credit as the greater of 2 percent of so much of the taxpayer's taxable income for the taxable year as does not exceed $9,000 or the product obtained by multiplying $35 by the number of exemp- tions for provisions for determination of the amount of such credit as the product obtained by multiplying $30 by the number of exemptions, and added par. (2). Subsecs. (c), d). Pub. L. 94-164 added subsecs. (c) and (d). EFFECTIVE DATE OF 1976 AMENDMENT Section 401(e) of Pub. L. 94-455 provided that: "The amendments made by subsections (a) and (c) (to sub- sees, (a) and (c)(1) of this section, sections 43(a) to (c)(1)(A) and 6096(b) of this title, and to notes under this section and section 43 of this title] shall apply to taxable years ending after December 31, 1975, and shall cease to apply to taxable years ending after De- cember 31, 1977. The amendments made by subsection (b) [to sections 141(b), (c) and 6012(a) of this title] shall apply to taxable years ending after December 31, 1975. The amendments made by subsection (d) [to sec- tion 3402(a), (c), (m) of this title] shall apply to wages paid after September 14, 1976." Amendment of subsec. (b)(2) by section 503(b)(4) of Pub. L. 94-455 applicable to taxable years beginning after Dec. 31, 1975, see section 508 of Pub. L. 94-455, set out as an Effective Date of 1976 Amendment note under section 3 of this title. EFFECTIVE AND TERMINATION DATES OF 1975 AMENDMENT Section 3(b) of Pub. L. 94-164 as amended by Pub. L. 94-455 §401(a)(1), provided that: "The amendments made by subsection (a) [amending this section] shall apply to taxable years ending after December 31, 1975. Such amendments shall cease to apply to taxable years ending after December 31, 1977." Section 209(a) of Pub. L. 94-12 as amended by Pub. L. 94-164 § 2(e), provided that: "The amendments made by sections 201, 202(a), and 203 [enacting this section and amending sections 3, 56, 141, 6012, and 6096 of this title] shall apply to taxable years ending after December 31, 1974. The amendments made by section 201(a) and 202(a) [amending section 141 of this title] shall cease to apply to taxable years ending after December 31, 1975; those made by sections 201(b), 201(c), and 203 [enacting this section and amending sections 3, 56, 6012, and 6096 of this title] shall cease to apply to taxable years ending after December 31, 1976." SECTION REFERRED TO IN OTHER SECTIONS This section is referred to in sections 44, 44A, 56, 6096, 6153 of this title. § 43. Earned income (a) Allowance of credit In the case of an eligible individual, there is allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to 10 percent of so much of the earned income for the taxable year as does not exceed $4,000. (b) Limitation The amount of the credit allowable to a tax- payer under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount equal to 10 percent of so much of the adjusted gross income (or, if greater, the earned income) of the taxpayer for the taxable year as exceeds $4,000. (c) Definitions For purposes of this section- (1) Eligible individual The term "eligible individual" means an in- dividual who, for the taxable year- (A) maintains a household (within the meaning of section 44A(f) (1)) in the United States which is the principal place of abode of that individual and- (i) a child of that individual if such child meets the requirements of section 151(e)(1)(B) (relating to additional ex- emptions for dependents), or (ii) a child of that individual who is dis- abled (within the meaning of section 72(m)(7)) and with respect to whom that individual is entitled to claim a deduction under section 151; and (B) is not entitled to exclude any amount from gross income under section 911 (relat- ing to earned Income from sources without the United States) or section 931 (relating to income from sources within the posses- sions of the United States). (2) Earned income (A) The term "earned income" means- (I) wages, salaries, tips, and other em- ployee compensation, plus (ii) the amount of the taxpayer's net earnings from self-employment for the taxable year (within the meaning of sec- tion 1402(a)). (B) For purposes of subparagraph A)- (I) except as provided in clause (ii), any amount shall be taken into account only if such amount is includible in the gross income of the taxpayer for the taxable year, (ii) the earned income of an individual shall be computed without regard to any community property laws, (iII) no amount received as a pension or annuity shall be taken into account, and Page 47