The child tax credit is a benefit for taxpayers with dependents. It is a partially refundable credit that helps parents with children under 17. The child tax credit underwent significant changes for 2025. If you have children, understanding this tax credit is an important way to help offset the cost of raising a child.
2025 Child Tax Credit Amounts and Value
The 2025 child tax credit is worth up to $2,200 for each qualifying child claimed on your 2026 tax return. This is an increase of $200 from the 2024 credit.
Eligibility Requirements for the 2025 Child Tax Credit
The eligibility requirements for the credit changed for 2025. The 2024 child tax credit had seven requirements that a child needed to meet to qualify as a dependent. The One Big Beautiful Bill added an extra qualifying test. Now, both the parent and the child need a work-eligible Social Security number.
For a child to qualify for the 2025 child tax credit, eight requirements must be met. These requirements are tests that must be passed to be considered a qualifying child.
- The child must be under age 17 at the end of the tax year.
- The child must be listed as a dependent on your tax return.
- The child must be your biological, adopted, foster, or stepchild, or your sibling. Descendants of your children, stepchildren, and siblings also qualify.
- The child must be a U.S. citizen, a U.S. resident, or a U.S. national.
- The child may not provide more than half of their own support.
- The child must live with you for more than half of the year. The only exception is for divorced or separated parents when the child may live with one parent for more than half the year.
- The child cannot file a joint return. The only exception is for cases where they file solely to claim a refund of withheld or estimated taxes.
- The child must have a Social Security number issued before the due date of your tax return, and it must be valid for work in the United States.
Phase-Out Rules for Different Filing Statuses
The credit amount changes depending on your modified adjusted gross income. The higher your income, the lower the credit. Once you reach a certain income threshold, the tax credit phases out completely. Your modified adjusted gross income for child tax credit purposes is your adjusted gross income plus any foreign earned income exclusion, foreign housing deductions, or exclusion of income from Puerto Rico or American Samoa. To determine this, consult a tax professional or use quality tax software.
The child tax credit phase-out amount is reduced by $50 for every $1,000 your modified adjusted gross income exceeds $200,000 if you file as Single, Head of Household, or Married Filing Separately. The reduction starts at $400,000 if you are Married Filing Jointly. If your modified adjusted gross income is under these limits, you receive the full $2,200 per qualifying child.
You must have earned income of at least $2,500 to qualify for the child tax credit. If your tax liability is lower than the credit, you will not qualify because the credit cannot exceed your tax liability.
Additional Child Tax Credit (ACTC) for 2025
The Additional Child Tax Credit (ACTC) for 2025 is a refundable portion of your credit. If your tax liability is low, the ACTC may be an option. People who do not owe taxes and may not otherwise file a return may want to file because they could benefit from claiming the ACTC.
ACTC Eligibility Requirements
For a child to qualify for the ACTC, they must meet the same requirements as the child tax credit. You must also have earned income over $2,500 to qualify. The ACTC is capped at $1,700 per qualifying child and cannot exceed 15 percent of your earned income above $2,500.
Claiming the Child Tax Credit on Your 2025 Tax Return
You can claim the child tax credit on your return in a few simple steps:
- Confirm eligibility.
- Gather documentation, including Social Security numbers for each child you are claiming, your W-2 and 1099 forms showing your income, and your prior year's tax return if needed.
- Complete the tax form. Fill out Schedule 8812 to determine how much child tax credit and Additional Child Tax Credit you may receive.
- Complete Form 1040. List your dependents on Form 1040, and check “Child Tax Credit” for each dependent who qualifies.
- File your return electronically or by mail. Be sure to include all required forms.
Common Mistakes to Avoid
One of the most common mistakes is claiming a child who does not meet all qualifying requirements. Other common mistakes include using the wrong filing status, and overreporting or underreporting income and expenses.
Always check your forms before filing to ensure you enter the correct Social Security numbers for you and your dependents. Filing a Social Security number that does not match the name on the card will cause delays. It is also important to make sure the child's Social Security number is issued before the due date of the return.
Help For Your Taxes is Available
Navigating the tax filing process can be daunting, and you want to make sure you get it right. With help from the professionals at Pasquesi Sheppard Accountants and Consultants, tax season can be less stressful, and you will receive all the benefits you qualify for. Give us a call today to learn more.