Child tax credit 2025: Child tax credit updates and payments

Key takeaways

• The Child Tax Credit (CTC) helps reduce federal income tax for families with children under 17 at the end of the tax year, providing financial relief for child-related expenses.
• The CTC is worth up to $2,200 per child for the 2025 tax year. The refundable portion of the CTC, called the Additional Child Tax Credit (ACTC), is $1,700.
• The CTC operates as a partially refundable tax credit, not as monthly payments as in some prior years.
• To qualify for the CTC, your qualifying child must be under 17 at the end of the tax year, live with you for more than half the year, be your dependent child, and meet citizenship requirements.
• The CTC starts phasing out at a MAGI of over $200,000 for single filers and $400,000 for joint filers, reducing by $50 per $1,000 above these limits.
• The ACTC is a refundable portion of the CTC for those whose CTC exceeds their tax, with a refund calculated as 15% of earned income over $2,500, up to $1,700.
• To claim the CTC, gather necessary documentation and fill out Form 8812, Credits for Qualifying Children and Other Dependents, and the relevant line on Form 1040. Work with a Tax Pro to ensure you get the full credit.

What is the Child Tax Credit?

The Child Tax Credit (CTC) is a tax benefit designed to ease the financial burden of providing for a child or children. The CTC provides financial assistance to people with children by reducing their federal income tax. If you have a child, or multiple children, under the age of 17, you may qualify for the CTC.

By directly lowering your taxes, the CTC could help to put more money back in your pocket. That means you’ll have more money for the everyday costs of raising kids, like school supplies, groceries, healthcare expenses, lessons, and more.

Child Tax Credit 2025

What’s changed about the CTC for the 2025 tax year? The CTC is worth up to $2,200 per qualifying child. However, the refundable portion, known as the Additional Child Tax Credit (ACTC), is worth up to $1,700.

That means if your CTC is more than your tax, you could get up to $1,700 back as a refund. This, of course, depends on how much you owe, your income and some other factors. However, this makes the CTC incredibly helpful for families with lower incomes.

Book an appointment now to claim the Child Tax Credit

Child Tax Credit 2025 payments

In the 2025 tax year, the CTC will not be paid out in the form of payments. Instead, it’s a tax benefit that can provide families with up to $2,200 in tax relief per qualifying child. If your tax is already $0, you could get up to $1,700 per qualifying child as a refund.

Who qualifies for the Child Tax Credit? 

To qualify for the CTC, your child must…

• Be under 17 years old at the end of the tax year.
• Have lived with you over half of the tax year except for temporary absences, like vacations, schools, camp, etc.
• Not have provided more than half of their own financial support during the year.
• Be a U.S. citizen, U.S. national, or U.S. resident alien.

Whether or not your child qualifies, and how much you may get, also depends on your filing status and income, specifically your modified adjusted gross income (MAGI), which is your income adjusted for certain deductions.

For single filers

For married couples filing jointly

Calculate your Child Tax Credit 

The maximum credit amount for the CTC in 2025 is $2,200 per qualifying child. However, the actual amount you qualify for per child depends on your MAGI. As we mentioned above, the CTC starts phasing out at $200,000 for single filers and $400,000 for married couples filing jointly. For every $1,000 you make above these limits, your CTC will be $50 less.

For single filers

In addition to your MAGI, the CTC amount you qualify for also depends on how many qualifying children you have. The more qualifying dependent children you have, the greater the credit you’ll qualify for.

Here’s an example

Let’s say Charlie is a single filer with a MAGI of $216,000 and three qualifying dependent children. Here’s how you calculate Charlie’s CTC amount.

First, determine the base credit amount by multiplying the maximum amount by the number of qualifying children.

$2,200×3=$6,600

Next, calculate the phase-out amount. Remember, the CTC is worth $50 less for every $1,000 your MAGI is over the CTC income limit. Charlie’s MAGI is $16,000 over the phase-out limit. To calculate Charlie’s credit adjustment, divide the overage amount by $1,000, and then, multiply by $50.

$16,000÷$1,000=16

16×$50=$800

Finally, subtract Charlie’s credit adjustment from the base credit amount.

$6,600-$800=$5,800

Charlie would qualify for a CTC of $5,800 total, or $1,933 per child.

Additional Child Tax Credit 

The ACTC is the refundable portion of the CTC. If your CTC is greater than your tax, you may be eligible for up to $1,700 in a refund. Here are a couple things you need to know about the ACTC.

Who’s eligible for the ACTC?

To qualify for the ACTC, you must have a CTC that exceeds your tax and earned income of at least $2,500, which can come from self-employment, wages, or disability payments. The ACTC is designed for families who may not owe enough in taxes to use the full Child Tax Credit. If your income is unearned, like interest, alimony payments, child support, Social Security, pensions, etc., you may not qualify for the ACTC.

How do you calculate the ACTC?

The amount of the ACTC you can receive depends on many factors, including your income and the number of qualifying children you have. Typically, the refund is calculated as 15% of your earned income over $2,500, up to the maximum refundable amount of $1,700 per child.

Let’s say Donna’s MAGI is $20,000 and she has two qualifying children. To calculate Donna’s ACTC amount, the first thing you’ll need to do is determine how much of her income is over the $2,500 threshold.

$20,000-$2,500=$17,500

Then, multiply Donna’s income that exceeds the threshold by 15%.

$17,500×.15=$2,625

Because $2,625 is less than $3,400, which is the maximum ACTC for two children, Donna would qualify for the full $2,625. Keep in mind that the ACTC is calculated from what’s left over of the CTC after your tax has been calculated. Higher tax will mean a smaller ACTC.

How to claim the Child Tax Credit 

The first thing you’ll need to do to claim the CTC is to gather all the documentation. This includes Social Security numbers for each qualifying child, as well as your tax documents, such as your W-2s and any other income statements you have.

When you fill out your tax return, you’ll complete Form 8812 and the Child Tax Credit line on Form 1040. Form 8812 is where you’ll indicate the number of qualifying children you have, and it will guide you through calculating the credit.

You can also use Form 8812 to claim the Credit for Other Dependents (ODC). The ODC is a nonrefundable credit for dependents that don’t meet the qualifications for the CTC, such as dependent children over 17 or dependent relatives. It is $500 per qualifying individual.

A Tax Pro can help determine whether you’re eligible for the full credit or if your credit will be reduced due to income thresholds.

Claiming the CTC can significantly reduce your tax and maybe even result in a refund, providing valuable financial support to your family. Work with a Tax Pro to ensure you receive the full benefit you’re entitled to.

About the Author

Mark Steber is Senior Vice President and Chief Tax Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

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