As the 2025 tax season approaches, families across the United States are eager to understand the benefits of the Child Tax Credit (CTC) and determine their eligibility. The CTC offers significant financial relief, providing up to $2,000 per qualifying child under the age of 17. Notably, up to $1,700 of this credit is refundable, meaning eligible families can receive this amount as a refund even if they owe no federal income tax.
Eligibility Criteria
To qualify for the CTC in 2025, families must meet specific requirements:
- Age: The child must be under 17 years of age at the end of the tax year.
- Relationship: The child must be your son, daughter, stepchild, foster child, sibling, stepsibling, or a descendant of any of them, such as a grandchild or niece/nephew.
- Support: The child must not have provided more than half of their own support during the tax year.
- Residency: The child must have lived with you for more than half of the tax year.
- Dependent Status: The child must be claimed as a dependent on your tax return.
- Citizenship: The child must be a U.S. citizen, U.S. national, or U.S. resident alien with a valid Social Security number issued before the due date of your tax return.
- Income Thresholds: The credit begins to phase out if your modified adjusted gross income (MAGI) exceeds $200,000 for single filers or $400,000 for joint filers. Beyond these thresholds, the credit reduces by $50 for every $1,000 of additional income.
Refundable Portion
The refundable portion of the CTC, known as the Additional Child Tax Credit (ACTC), allows eligible taxpayers to receive up to $1,700 per qualifying child as a refund. To claim the ACTC, you must have earned income of more than $2,500. The refundable amount is calculated as 15% of your earned income over this threshold, up to the maximum of $1,700 per child.
How to Claim
To claim the CTC and any refundable portion, you’ll need to file Form 1040 and attach Schedule 8812, “Credits for Qualifying Children and Other Dependents.” Tax preparation software typically guides users through this process, ensuring all necessary forms are completed accurately.
Looking Ahead
It’s important to note that, under current legislation, the enhanced CTC is set to revert to pre-2018 levels after December 31, 2025. This means that for tax years beginning in 2026, the maximum credit will decrease to $1,000 per qualifying child.