Child Tax Credit: Eligibility, Amounts, and Phase-Outs for 2025

The Child Tax Credit (CTC) directly reduces your federal tax bill by up to $2,200 per qualifying child under age 17. A portion is refundable — meaning even families who owe little or no federal tax can receive it as a cash refund.

2025 CTC at a Glance

Who Qualifies as a Child?

To claim the CTC, the child must meet all of these tests:

• Age test: Under age 17 at the end of the tax year (December 31, 2025 for the 2025 return). A child who turns 17 in 2025 does not qualify.
• Relationship test: Your son, daughter, stepchild, foster child, sibling, step-sibling, half-sibling, or a descendant of any of these (e.g., a grandchild or niece/nephew).
• Residency test: Lived with you for more than half the year (exceptions apply for divorced/separated parents, kidnapped children, or temporary absences).
• Support test: Did not provide more than half of their own financial support during the year.
• Dependency test: Must be claimed as your dependent on your return.
• Citizenship test: Must be a U.S. citizen, U.S. national, or U.S. resident alien.
• Social Security number: The child must have a valid Social Security number (an ITIN is not sufficient for the CTC).

Income Phase-Out: When the Credit Reduces

The CTC begins phasing out when your Modified Adjusted Gross Income (MAGI) exceeds the threshold for your filing status. The credit reduces by $50 for every $1,000 (or fraction thereof) of income above the threshold.

The Refundable Portion: Additional Child Tax Credit (ACTC)

The CTC is first applied against your tax liability. If the credit exceeds what you owe, up to $1,700 per child is refundable as the Additional Child Tax Credit (ACTC) — you receive it as a tax refund even if you owe nothing.

The refundable ACTC is calculated on Schedule 8812. The ACTC is generally the lesser of: (1) your unused CTC, or (2) 15% of your earned income over $2,500.

Note: Families with 3+ qualifying children may use an alternative calculation if it produces a larger ACTC. The ACTC cannot exceed the $1,700 per child cap.

How to Claim the Child Tax Credit

1. List the child as a dependent on Form 1040. Use Schedule 8812 (Credits for Qualifying Children and Other Dependents) to calculate the credit amount.
2. Enter the child's Social Security number. It must appear on your return. An ITIN does not qualify.
3. Calculate MAGI phase-out. Enter your income and determine if the credit reduces.
4. Apply CTC against tax liability. The non-refundable portion reduces taxes owed to zero. Any remaining unused credit is checked against the ACTC calculation.
5. Claim refundable ACTC if applicable. If 15% of earned income over $2,500 exceeds your remaining CTC, you receive the lower amount as a refund.

Common Situations and Edge Cases

Divorced or Separated Parents

Only one parent may claim a child as a dependent in any given year. Generally, the custodial parent (the one the child lived with longer) has the right. The custodial parent may sign Form 8332 to release the exemption and CTC to the non-custodial parent for a specific year.

Child Turns 17 During the Year

If your child turns 17 in 2025, they do not qualify for the CTC for 2025. Age is determined as of December 31. However, they may still qualify as a dependent for other purposes, and you may be eligible for the $500 nonrefundable Other Dependent Credit.

College Students as Dependents

Children ages 17–23 who are full-time students may qualify as dependents for the Other Dependent Credit ($500, non-refundable) but do not qualify for the CTC, which is limited to children under age 17.

2026 Outlook: Will the CTC Change?

The current $2,200 CTC amount and $400,000 MFJ phase-out threshold were created by the Tax Cuts and Jobs Act of 2017. These provisions are currently scheduled through 2025 under TCJA, with Congress responsible for any extension or modification.

Under current law as of early 2026, the CTC for tax year 2026 is projected at approximately $2,200 per child if Congress extends or makes permanent the TCJA provisions. Without action, the credit would revert to the credit amount per child with a lower phase-out threshold. Monitor IRS and Congressional guidance as legislation evolves.

Key Takeaways

• The CTC is worth up to $2,200 per qualifying child under age 17 for tax year 2025
• Up to $1,700 per child is refundable as the Additional Child Tax Credit (ACTC)
• Phase-out begins at $400,000 (MFJ) and $200,000 (Single/HoH)
• Credit reduces by $50 for every the credit amount of income above the threshold
• The child must have a valid SSN (ITIN does not qualify)
• Claim on Schedule 8812; refundable ACTC requires earned income above $2,500
• Future CTC amounts depend on Congressional action on TCJA extension