Election to use prior year earned income

(a) In general Paragraph (2) of section 32(c) is amended by adding at the end the following new subparagraph: (C) Election to use prior year earned income (i) In general If the earned income of the taxpayer for any taxable year is less than the earned income of the taxpayer for the preceding taxable year, the credit allowed under subsection (a) may, at the election of the taxpayer, be determined by substituting— (I) such earned income for such preceding taxable year, for (II) such earned income for the taxable year for which such credit is being determined. (ii) Application to joint returns For purposes of clause (i), in the case of a joint return, the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such taxable year. (iii) Special rules (I) Errors treated as mathematical errors For purposes of section 6213, an incorrect use on a return of earned income pursuant to clause (i) shall be treated as a mathematical or clerical error. (II) No effect on determination of gross income, etc Except as otherwise provided in this subparagraph, this title shall be applied without regard to any substitution under clause (i).. (b) Effective date The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2025.