If you have minor children, the child tax credit (CTC) can be a lifesaver for your family finances in a year of uncertainty. For 2025, the rules are still a bit complicated, but here we explain them without technicalities. We are going to talk about amounts, requirements, and even the possible changes that could arrive after 2025.
The maximum CTC amount in 2025 is $2,000, similar to the previous year, but only $1,700 of that is refundable. This means that even if you don’t owe taxes, you could receive money back if you meet the income requirements. Now, the refundable part did not increase 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?
The CTC is not for all families, to begin with, but you have to qualify for it. If you are single, and earn more than $200,000 (or $400,000 for couples filing jointly), the credit begins to reduce. And the reduction is calculated as follows: For every $1,000 that your income exceeds the limit, the benefit is cut by $50. So, for example, if your income is $210,000, your CTC would drop to $1,500.
But don’t worry: these amounts are modified adjusted gross income (MAGI), which is basically your earnings after certain deductions. If you’re not sure, the IRS has an online tool called Interactive Tax Assistant to help you calculate it.
The increase in the CTC to $2,000, approved in 2017, expires in 2025. If Congress does not renew it, in 2026 the credit will return to $1,000 per child.
In 2024, there were attempts to extend the increased CTC, but the Senate blocked the proposal. With the upcoming elections and ongoing debates over the budget deficit, the future of the CTC is uncertain.
Other tax credits that you can take into account
There is also another tax credit you can take advantage of: it’s called the Other Dependent Credit (ODC), and it’s for families with children over 17 who are financially dependent (for example, if they’re in college and you pay all their expenses).
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.
