The federal Earned Income Tax Credit is a refundable tax credit that reduces or eliminates taxes paid by low-income working taxpayers and often functions as a wage subsidy for low-income taxpayers. The size of the credit is based of how much earned income the taxpayer has accumulated over the year. The Earned Income Tax Credit is currently the largest poverty reduction program in the United States with nearly 21 million families receiving more than $36 billion in 2004.