If you’re a parent or guardian, you’ve probably heard about the Child Tax Credit (CTC). Good news: there are some changes coming for the 2025–2026 tax years that you’ll want to understand. Let’s walk through these updates in plain English—what they are, how they affect you, and what you should keep in mind.
What is the Child Tax Credit?
The basics
The Child Tax Credit is a federal tax benefit in the U.S. designed to help families with qualifying children reduce their tax bill. IRS+1 If your child meets certain requirements, you can claim this credit when you file your tax return.
Why it matters
It’s not just about paying less tax—it’s about putting more money back into your household budget. For many families, the CTC provides some breathing room for costs like child care, schooling, and everyday expenses.
The long view
Over time, the CTC has seen several changes—some temporary, some permanent. For example, during the pandemic the credit was expanded significantly (for one year). Now we’re moving into another phase of updates for 2025–2026.
What’s changing for 2025–2026?
The credit amount is going up
For tax year 2025 (which you’ll file in 2026), the maximum credit per qualifying child will increase. According to sources, it will reach $2,200 per child. Previously it was around $2,000.
Refundable portion remains capped
If your tax liability is less than the credit, part of the credit can be refunded. For 2025, the refundable portion (known as the Additional Child Tax Credit or ACTC) is capped at about $1,700 per child. Jackson Hewitt So you could reduce your tax to zero and still get back up to $1,700 per child under the right conditions.
Income phase‐out thresholds remain similar
To qualify for the full amount, your income needs to be at or below certain levels. For example, single filers with a modified adjusted gross income (MAGI) up to ~$200,000 and married couples filing jointly up to ~$400,000 may see the full credit. The credit begins to phase out above those thresholds.
Qualifying child and filing changes
Your child must meet the usual tests: under age 17 at year end, lived with you more than half the year, etc. Also, newer rules emphasize that the child must have a valid Social Security Number, and in some cases at least one filer must too.
Inflation adjustments from 2026 onward
Beginning in 2026, the credit may be indexed for inflation (meaning it could rise a little each year based on cost-of-living increases).
How do the changes affect different families?
Middle‐income families
If your income is under the phase-out line and you have qualifying children, you’ll benefit directly from the $2,200 per child. That’s more relief than before.
Low‐income families
For families with very low incomes (minimal or no tax liability), the $1,700 refundable portion is helpful—but there are caveats: the credit only becomes refundable after you earn at least a certain amount of income. That means if your earnings are too low, you might not receive the full benefit.
Higher‐income families
If your income is above the phase-out threshold (say over ~$200K for a single filer or ~$400K for joint filers), your credit will begin to shrink. For each $1,000 of income above the threshold, your credit may reduce by ~$50.
Mixed-status and immigrant families
Some new eligibility rules may affect families where children or parents lack certain Social Security credentials. For example, if you or your spouse file jointly and one parent lacks a Social Security Number, that may impact eligibility.
The key eligibility tests you must know
Qualifying child requirements
- Child must be under age 17 at the end of the tax year.
- Child must have lived with you more than half the year.
- Child must be your dependent and have a valid Social Security Number.
Claimant and income requirements
- You must file Form 1040 and attach Schedule 8812 when claiming the CTC.
- Your MAGI must be at or below a threshold for full credit. Above that, phase-out begins.
Filing status, SSN and other rules
- If you file jointly, both you and your spouse must have valid SSNs in many instances.
- If you’re claiming a child under these rules, ensure their SSN is issued before the due-date of your return.
How to claim the credit (step-by-step)
Step 1 — Gather your info
Collect your children’s Social Security Numbers, your filing status, your income documents (W-2s, 1099s, etc.), and any other dependency info.
Step 2 — Complete your tax return
On Form 1040 you’ll list your dependents. Then you’ll fill out Schedule 8812 (Credits for Qualifying Children and Other Dependents) to claim the CTC/ACTC.
Step 3 — Calculate your credit
Based on how many qualifying children you have and your income, determine the credit. Remember the maximum is $2,200 per child for 2025. Then factor in your tax liability and whether you can get a refund portion up to $1,700.
Step 4 — Check for phase-out
If your income is above the threshold (e.g., over $200 K single, $400 K joint) the credit will reduce. For every $1,000 above the limit, expect roughly a $50 reduction.
Step 5 — File your return
Once your numbers are filled in, submit your return. If you’re eligible for a refund, you may receive that back as part of the federal refund.
Step 6 — Stay informed
Tax rules can change. For example, earlier expansions were temporary and have since expired or changed. Keep an eye on IRS updates.
Frequently asked “what-ifs”
What if my income goes up mid-year?
If your income rises and exceeds the phase-out threshold, your credit may shrink. You may want to adjust your withholding or estimated taxes accordingly.
What if I’m self-employed?
You still count as earned income eligible for the ACTC portion, but keep accurate records (1099s, Schedule C, etc.). The base earned income rules still apply.
What if my child turns 17 during the year?
If your child turns 17 on December 31 of the tax year, they generally no longer qualify for the credit that year—because the age test is “under 17 at the end of the year.”
What if I only worked part of the year or earned very little?
To get the refundable portion (up to $1,700), you need to meet the earned income threshold (e.g., ~$2,500). If you earn less, you may not receive the full refund.
What happens if rules change after 2025?
Some prior provisions were temporary and set to expire unless renewed by Congress. For example, earlier versions of the CTC were scheduled to drop back down if no action was taken. Inland Counties Legal Services, So it’s wise to stay alert.
Common pitfalls to watch out for
Missing or invalid SSNs
If a qualifying child or the taxpayer lacks a valid Social Security Number, that can disqualify the credit. The rule around SSNs has tightened.
Filing status screw-ups
Using the wrong filing status may hurt your eligibility or reduce your credit—especially if divorced, separated, or sharing custody.
Income miscalculations
Mis-estimating MAGI or earned income might result in an incorrect credit. Double-check your numbers and use reputable tax software or a professional if needed.
Thinking of CTC as a “monthly payment”
In prior years (2021) the credit was paid out monthly in advance. Now, for 2025, it’s claimed when you file your return—not monthly.
Ignoring phase-out rules
Even if you see the headline “$2,200 per child,” remember that phase-out rules may reduce that depending on your income.
Tips to make the most of it
Keep clear records
Track your children’s SSNs, dates of birth, days lived with you, and your income. Having tidy records helps avoid headaches.
Estimate early
You can use tax-software or worksheets early in the year to estimate your expected credit and plan accordingly.
Consider adjustments
If you expect your income to change significantly (e.g., job change, self-employment income, spouse change), consider how that affects your credit.
Watch for legislative updates
Since the credit’s terms (e.g., phase-in rules, refundable limits) have changed in the past and may again, staying informed is wise.
Consult a professional
If your situation is complex (mixed-status family, self-employment, custody issues), a tax pro may help you maximize your benefit and avoid costly mistakes.
Looking toward 2026 and beyond
Indexing for inflation
As mentioned, the credit amount and thresholds may begin being adjusted annually for inflation starting in 2026. That means a slight bump each year—though perhaps modest.
Still uncertain areas
There are still discussions in Congress about broader changes: increasing the credit further, making more inclusive rules for lower-income families, or altering phase-in/phase-out rules.
Be ready for change
As tax policy evolves, families should remain adaptable. What works this year may shift next year. But as long as you stay informed and organized, you’ll be ready.
Conclusion
Alright, you made it through! The 2025–2026 changes to the Child Tax Credit bring some good news: a higher maximum credit per child ($2,200) and continued opportunity for the refundable portion (up to approximately $1,700). But it’s not just about bigger numbers—it’s also about meeting eligibility tests, minding phase-out thresholds, and filing correctly. For many families, this credit can be a meaningful boost. Just remember: the rules matter, your income matters, and your paperwork matters. Get ready, stay organized, and make the most of what’s yours.
FAQs
Q1: Can I claim the Child Tax Credit if I earn very little?
A1: Yes—but only if you have some earned income above a minimum threshold (typically around $2,500) to qualify for the refundable part of the credit. If you earn nothing or very little, you may not get the full benefit.
Q2: If my child turns 17 during 2025, can I still claim the credit?
A2: Generally, no. For tax year 2025, to qualify your child must be under 17 years old at the end of the year (December 31). If they turn 17 earlier in the year, they don’t count as a qualifying child.
Q3: How does the increase to $2,200 per child compare to what it was before?
A3: Previously the maximum credit was about $2,000 per child. With the change for 2025, it increases to $2,200. The refundable part remains around $1,700. So the total benefit is slightly higher for those who qualify.
Q4: What if my income is above the phase-out threshold?
A4: If your income exceeds the thresholds (e.g., ~$200K single filer or ~$400K married filing jointly), your credit begins to reduce. Typically the reduction is about $50 for each $1,000 over the limit. That means you may receive a smaller credit per child.
Q5: Will these rules remain the same after 2026?
A5: Not necessarily. While some changes (like the $2,200 amount) are set for 2025, future years may bring indexing for inflation or further legislative changes. It’s wise to stay updated each tax season.