If you have minor children, the child tax credit (CTC) can help your family’s finances during an uncertain year. The rules for 2025 are still a little complicated, but we’ll explain them without getting too technical. We will discuss amounts, requirements, and potential changes after 2025.
The maximum CTC amount in 2025 is $2,000, the same as the previous year, but only $1,700 of that is refundable. This means that even if you don’t owe taxes, you may be eligible for a refund if you meet certain income requirements. Now, the refundable portion has not increased for 2025.
Are you eligible for the Child Tax Credit? Check these points
Before you get excited, check to see if your family qualifies:
- Child’s age: Less than 17 years old as of December 31, 2025.
- Relationship: Biological children, adopted children, stepchildren, siblings, grandchildren… even nephews if they lived with you for more than half a year!
- Documentation: The child must have a valid Social Security number before you file your taxes.
- Residence: Must have lived with you for more than half the year.
- Dependency: You have to claim it as a dependent on your return.
This is definitive: if your child files their own tax return (unless it’s just to claim a refund), they don’t apply.
Income limits: How much can you earn to qualify for CTC?
To begin with, the CTC is not available to all families, but you must meet certain requirements. If you are single and earn more than $200,000 (or $400,000 for couples filing jointly), the credit starts to dwindle.
The reduction is calculated as follows: for every $1,000 that your income exceeds the limit, the benefit is reduced by $50. For example, if your income is $210,000, your CTC would be $1,500.
But don’t worry, these figures represent modified adjusted gross income (MAGI), which is your earnings after certain deductions. If you’re unsure, the IRS offers an online calculator called Interactive Tax Assistant.
The CTC increase to $2,000, approved in 2017, will expire in 2025. If the credit is not renewed by Congress, it will revert to $1,000 per child in 2026.
Attempts to extend the increased CTC in 2024 were unsuccessful, as the Senate blocked the proposal. With the upcoming elections and ongoing debates over the budget deficit, the CTC’s future remains uncertain.
Other tax credits that you can take into account
Another tax credit you can take advantage of is the Other Dependent Credit (ODC), which is available to families with financially dependent children over the age of 17.
In addition to the federal CTC, several states have implemented their own tax credits to help families with children. Some examples include:
- California: Offers its own state CTC, providing additional relief to eligible families.
- Colorado: Provides a child tax credit, especially for families with young children.
- New Jersey: Offers a refundable tax credit for parents of children under age 6, with certain income limits.
Keep in mind that the eligibility amounts for these state credits vary compared to those sent by the federal government, so you should check with your state, first, if there is a tax credit you can apply for, and then, what requirements they must meet.
