Protecting Americans From Tax Hikes (PATH) Act

The Protecting Americans From Tax Hikes (PATH) Act of 2015 is a federal law that renewed and expanded multiple tax credits for individuals, families, and businesses while adding measures to reduce fraud. Several temporary tax provisions were extended or made permanent, and administrative rules were introduced to give the IRS more time to verify certain refundable credits.

Key takeaways

• Made the Child Tax Credit (CTC) and the Earned Income Tax Credit (EITC) permanent (they had been temporary).
• Returned refunds claiming EITC or the Additional Child Tax Credit (ACTC) are held until Feb. 15 to allow fraud detection.
• Required renewal of Individual Taxpayer Identification Numbers (ITINs) that haven’t been used on a return in the prior three years.
• Retroactively extended and renewed many expired tax breaks, including the Work Opportunity Tax Credit (WOTC).
• Added protections such as excluding wrongful-incarceration awards from taxable earned income.

What the PATH Act did

The PATH Act targeted refundable and partially refundable credits that are prone to fraud and identity theft. Its major provisions include:
* Refund timing: Refunds that claim EITC or ACTC are not issued before Feb. 15 each year, giving the IRS extra time to screen returns.
* ITIN renewal: ITINs unused on a tax return for three consecutive years are invalid and must be renewed to avoid refund delays or ineligibility for credits.
* WOTC extension: The Work Opportunity Tax Credit was extended retroactively to workers hired on or after Jan. 1, 2015; a separate category was added for long-term unemployed hires on/after Jan. 1, 2016.
* Wrongful incarceration exclusion: Exonerated individuals can exclude monetary awards related to wrongful incarceration from earned income and may file refund claims for prior tax years when appropriate.
* Other extensions: Numerous expired credits and deductions (tuition-related breaks, certain energy credits, etc.) were renewed or extended, some retroactively.

How tax credits differ from deductions

• Tax deduction: Reduces taxable income.
• Tax credit: Reduces tax liability dollar for dollar and may be refundable (resulting in a refund when the credit exceeds tax owed).

Refundable credits (like parts of EITC and ACTC) are especially susceptible to fraud because they can produce refunds beyond a filer’s tax liability.

Fraud and scam risks

Scammers have targeted eligible families (especially low-income households) by impersonating IRS agents and tricking people into revealing personal information to claim credits such as the CTC. Taxpayers should never provide personal or financial information in response to unsolicited calls, texts, emails, or social-media messages alleging to be from the IRS.

EITC, ACTC, and refund timing

• EITC: A refundable credit for low- and moderate-income workers; amounts vary based on filing status and number of qualifying children.
• ACTC: The refundable portion of the Child Tax Credit — it’s what families receive when the CTC exceeds their tax liability.
• Refund timing: If you claim EITC or ACTC, the IRS generally holds your refund until Feb. 15 to review the return. Filers who do not claim these credits are not affected by the Feb. 15 delay.

Selected EITC limits (examples)

Income limits change by tax year and with the number of qualifying children. Examples for individual filers with no children:
* Tax year 2024: single/HOH/MFS limit — $18,591; married filing jointly — $25,511.
* Tax year 2025: single/HOH/MFS limit — $19,104; married filing jointly — $26,214.
(These limits increase for filers with qualifying children. Other rules, such as caps on investment income, also apply.)

Additionally, the EITC maximum for childless households was $632 for tax year 2024 and $649 for 2025.

Policy context

Subsequent legislation and proposals have affected or debated portions of credits addressed by the PATH Act. For example:
* The American Rescue Plan (2021) temporarily expanded and increased the Child Tax Credit for 2021; those expansions expired at the end of 2021.
* Proposals to further expand the CTC (e.g., in Build Back Better) did not become law, and later major legislation did not include a permanent federal expansion.

Frequently asked questions

What’s the difference between the CTC and the ACTC?
* The CTC is the overall child tax benefit. The ACTC is the refundable portion of that credit that can result in a refund when the CTC exceeds the filer’s tax liability.

Do the PATH Act protections help taxpayers?
* Yes. The PATH Act both preserved and extended credits that benefit families and workers and established administrative safeguards (refund holds, ITIN controls) to reduce fraud and improper payments.

Bottom line

The PATH Act strengthened and extended key tax credits while adding administrative steps intended to curb fraud and identity-theft-related improper payments. Its rules — especially the refund delay for EITC/ACTC and ITIN renewal requirements — remain important for taxpayers who claim refundable credits or use ITINs.