2025 Child Tax Credit: What Will You Receive?

If you have children or other dependents under the age of 17, you likely qualify for the Child Tax Credit. In 2021, it was temporarily expanded as part of the American Rescue Plan, which was signed by President Biden to help families deal with the financial hardships stemming from the COVID-19 pandemic. There are a number of income limits you should know about when planning how much you’ll receive.

Do you have questions about tax planning or financial planning in general? A financial advisor can help you create a plan.

What Is the Child Tax Credit and How Does It Work?

Tax credits offset your tax liability on a dollar-for-dollar basis. The Child Tax Credit (CTC) is one of numerous tax credits designed for families; it’s intended to give an income boost to the parents or guardians of children and other dependents. This credit applies to dependents who are 17 or younger as of the last day of the tax year.

The current child tax credit limit is $2,000 for every dependent you have who’s under age 17. While the CTC is not fully refundable, $1,700 is refundable for tax years 2024 and 2025. The OBBB introduces the following changes:

Makes increases to the CTC under the 2017 Tax Cuts and Jobs Act (TCJA) permanent, with a maximum limit of $2,200 per qualifying child beginning in 2026.
Allows for inflation-based adjustments to the CTC in future tax years.
Makes permanent the $1,700 refundable portion of the CTC, which will also be indexed for inflation beginning in 2026.

What didn’t change? Modified adjusted gross income (MAGI) thresholds for single taxpayers and heads of household remain at $200,000 to qualify, increasing to $400,000 for joint filers.

As a reminder, tax credits directly reduce the amount you owe the IRS. So, if your tax bill is $3,000, but you’re eligible for $1,000 in tax credits, your bill is now $2,000. This differs from a tax deduction, which reduces how much of your income is subject to income taxes.

Which Dependents Are Eligible for the Child Tax Credit?

Eligibility for the CTC hinges on a few factors. The child you claim as your dependent has to meet seven criteria from the IRS:

Age test: The child was under age 17 at the end of the tax year. The CTC is increased for children under age 6.
Relationship test: The child is your daughter, son, stepchild, foster child, adopted child, brother, sister, stepbrother, stepsister, half-sister or half-brother. The child can also be the direct descendant of any of those just mentioned (your grandchild, niece or nephew).
Support test: The child did not provide more than half of their own support for the tax year. The child also cannot file a joint return that year.
Dependent test: The child must be claimed as your dependent on your federal tax return.
Citizen and resident test: The child has to be a U.S. citizen, a U.S. national or a U.S. resident alien. The child must also have a Social Security number.
Residency test: The child must have lived with you for more than half of the tax year.
Income test: This is the same requirements as the ones listed earlier. In short, the CTC begins phasing out for families with income above $200,000 (single filers) or $400,000 (joint filers).

While children were required to have a valid Social Security number under the old tax rules, parents were not. A parent or guardian could claim the credit using an Individual Tax Identification Number (ITIN). Under the OBBB, at least one parent will be required to have a valid Social Security number as well.

The OBBB makes permanent one other requirement for the refundable portion of the credit. Eligible families must have at least $2,500 in earned income. The Tax Policy Center estimates that as many as 17 million children in low-income families will not receive the full credit due to this provision.

How to Claim and Track Your Child Tax Credit

A mom working at home and speaking with her child.

Eligible filers can claim the CTC on Form 1040, line 12a, or on Form 1040NR, line 49. To help you determine exactly how much of the credit you qualify for, you can use the Child Tax Credit and Credit for Other Dependents Worksheet provided by the Internal Revenue Service. If you need to file a return for a year before 2018, you can only claim the credit on Forms 1040, 1040A or 1040NR.

Eligible recipients who did not receive the right amount or nothing at all should verify their information on the IRS Child Tax Credit Update Portal. For cases where the portal shows that payment has already been disbursed but not received, a trace or inquiry to locate funds can be filed by mailing or faxing Form 3911 to the agency.

There could be a payment delay depending on the disbursement method. The IRS says that it can trace payments:

5 days after the deposit date and the bank says it hasn’t received the payment
4 weeks after the payment is in the mail by check to a standard address
6 weeks after the payment is in the mail, and you have a forwarding address on file with the local post office
9 weeks after the payment is in the mail, and you have a foreign address

The agency updates its frequently asked questions page with information about Child Tax Credit payments and posts notifications about delays.

Other Credits for Children and Dependents

There are additional federal and state provisions that help families care for children and other dependents.

Child and Dependent Care Tax Credit (CDCTC)

You can claim this credit if you have earned income and if you’re paying someone else to care for a dependent while you work, or look for work. Unlike the CTC, which you can only claim if you’re the parent or guardian of minor children, you can claim the CDCTC for aging parents and other disabled relatives. Qualifying dependents for the CDCTC include the following:

Children who are 12 or younger at the end of the tax year
Dependent adult family members or spouses who are not able to care for themselves due to mental or physical impairments, unless they have a gross income of $5,050 or more in 2024.

With the CDCTC, you can claim a credit from 20% to 35% of qualified care expenses for tax year 2024 (which you file in 2025). The exact percentage that you are eligible to deduct depends on your income level. The maximum amount of care expenses to which you can apply the credit is $3,000 if you have one dependent and $6,000 if you have more than one dependent.

The OBBB permanently increases the amount of the credit to 50% of qualifying expenses, beginning in 2026. The amount of the credit you can claim is phased down by 1% for each $2,000 that your adjusted gross income exceeds $15,000, but will not go below 35%.

The 1% phaseout continues for each $2,000 that your AGI exceeds $75,000, or $150,000 for joint filers. If you surpass this income threshold, the amount of the credit you can claim will not be less than 20%.

The CDCTC is non-refundable. According to the IRS, expenses that qualify for the CDCTC include money that you paid “for household services and care of the qualifying person while you worked or looked for work.” Child support payments do not qualify. To claim the CDCTC, you need to fill out Form 2441.

State Credits

Some states offer a complementary state-level CTC and/or CDCTC that matches part or all of the federal credit. In some states, the credits are refundable and in other states, they are not. This state-by-state guide breaks down which states offer their own Earned Income Tax Credit or CDCTC.

Bottom Line

The IRS offers child tax credits to help parents and guardians offset some of the costs of raising a family. The One Big Beautiful Bill attempts to expand tax credits for eligible families, allowing them to keep more of their income each year. While child tax credit 2025 payments have already been issued to families who have filed their returns, it’s never too soon to begin planning for next year’s filing.Remember that the information surrounding child tax credits can change each year. In turn, it’s important to keep up on the current laws each tax year so you know what to expect.

Tips for Saving on Your Taxes

A financial advisor with tax expertise can potentially help you manage your finances in a way that lowers your tax liability. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
To make sure you don’t miss a credit or deduction that you qualify for, use a good tax software. Check out SmartAsset’s breakdown of online tax software to find a suitable option.