Child Tax Credit

How It Works

The Child Tax Credit provides up to $2,000 per qualifying child under age 17 as of the end of the tax year. Unlike deductions that reduce taxable income, credits reduce your actual tax bill dollar-for-dollar, making them more valuable. For 2025, the credit begins phasing out at $200,000 AGI for single filers and $400,000 for married filing jointly, decreasing by $50 for each $1,000 of income above the threshold. Up to $1,700 of the credit is refundable as the Additional Child Tax Credit, meaning families with little or no tax liability can still receive a payment. To qualify, the child must be under 17, a U.S. citizen or resident, have a valid Social Security number, live with you for more than half the year, and not provide more than half of their own support. The credit also applies to adopted children and stepchildren. For families with multiple children, the credit adds up quickly — a family with three qualifying children can receive up to $6,000. The relatively high income phaseout threshold ($400,000 MFJ) means the credit benefits middle-class and upper-middle-class families as well as lower-income families. Divorced or separated parents should determine which parent claims the credit, as only the custodial parent (the parent with whom the child lives for the majority of nights) can claim it unless Form 8332 is filed to release the claim. The Child Tax Credit has changed significantly in recent years and its future parameters depend on legislative action.