Child Tax Credit 2025: New Amount Under the OBBBA
The One Big Beautiful Bill Act (OBBBA), signed in July 2025, increased the Child Tax Credit from $2,000 to $2,200 per qualifying child under age 17. This $200 increase per child represents a meaningful boost for families — a household with three qualifying children now receives up to $6,600 in tax credits, compared to $6,000 under the prior law. The credit is applied directly against your federal tax liability, reducing your tax bill dollar-for-dollar.
The refundable portion — the Additional Child Tax Credit (ACTC) — increased to $1,700 per qualifying child. This means lower-income families who owe little or no federal tax can still receive up to $1,700 per child as a cash refund. The ACTC is calculated as 15% of earned income above $2,500, capped at $1,700 per child. This refundability provision is critical for working families whose tax liability is low but who still have significant child-rearing expenses.
Who Qualifies for the Child Tax Credit?
To claim the CTC, your child must meet several requirements. The child must be under 17 at the end of the tax year and be your biological child, stepchild, adopted child, foster child, sibling, step-sibling, or a descendant of any of these (such as a grandchild or niece/nephew). The child must have lived with you for more than half the year and must not have provided more than half of their own financial support. The child must be a U.S. citizen, U.S. national, or U.S. resident alien and must have a valid Social Security number issued before the tax return due date.
You must claim the child as a dependent on your federal tax return. There are no separate forms to file for the CTC — it is automatically calculated based on the information on your Form 1040. Tax software handles this calculation, or your tax preparer will apply it during filing.
How the Child Tax Credit Phaseout Works
The CTC phases out at higher income levels to target the benefit toward middle and lower-income families. The phaseout begins at $400,000 of modified adjusted gross income (MAGI) for married filing jointly and $200,000 for all other filing statuses. For every $1,000 of income above the threshold (or fraction thereof), the credit is reduced by $50. For a single filer with two children earning $230,000, the phaseout reduction is $1,500 (30 × $50), reducing the $4,400 credit to $2,900.
The Additional Child Tax Credit: Getting Money Back Even If You Owe Nothing
The ACTC is the refundable portion of the CTC — it provides a cash refund to families even if their tax liability is zero. For 2025, the maximum refundable amount is $1,700 per qualifying child. The ACTC is calculated as 15% of your earned income that exceeds $2,500. For a family earning $30,000 with two children, the ACTC would be 15% × ($30,000 − $2,500) = $4,125, but capped at $1,700 × 2 = $3,400. IRS regulations require a processing hold on ACTC refunds — expect refunds no earlier than late February.
Other Dependent Credit: $500 for Non-Child Dependents
Dependents who do not qualify for the CTC — such as children age 17 or older, elderly parents, or other relatives you support — may qualify for the $500 Other Dependent Credit (ODC). This non-refundable credit reduces your tax liability but cannot generate a refund. The ODC is subject to the same income phaseout thresholds as the CTC ($400,000 MFJ / $200,000 others). College students age 17-23 who are still your dependents commonly qualify for this credit.