Last-Minute Update on Child Tax Credit: Everything You Need to Know

Changes to the Child Tax Credit (CTC) are set to impact millions of American families, offering crucial financial support to parents and caregivers with children under 17 years old.

These adjustments are important as they directly influence potential tax refunds and credits. With the upcoming tax year on the horizon, understanding the latest updates is essential for maximizing your tax benefits.

Understanding the Child Tax Credit (CTC)

The Child Tax Credit currently provides eligible families with a tax break of up to $2,000 per qualifying child under 17 years of age. For the 2024 tax year, filed in early 2025, families can expect a refundable portion of $1,700, which applies if their tax liability is below this amount.

Refundable Portion and Income Requirements

• Refundable Portion: The Additional Child Tax Credit (ACTC) allows eligible taxpayers to claim up to $1,700, provided they earn at least $2,500 annually.
• Income Limits: The credit begins to phase out for:
  • Individuals earning over $200,000
  • Couples with combined earnings exceeding $400,000

Eligibility Criteria

To qualify for the CTC, the following conditions must be met:

• The child must be under 17 years old.
• The child must be related to the taxpayer and live with them for over half the year.
• The taxpayer must have provided at least half of the child’s financial support.
• The child must hold U.S. citizenship or residency and have a valid Social Security number.

Key Changes to the Child Tax Credit for 2025

Refundable Portion Remains Stable

For the 2025 tax year, the refundable portion of the CTC will stay at $1,700, matching the 2024 level.

Expiration of the 2017 Tax Cuts and Jobs Act Provisions

The 2017 Tax Cuts and Jobs Act, which expanded the CTC, is set to expire after 2025. If no action is taken by Congress:

• The maximum CTC will drop to $1,000 per child.
• The qualifying age will reduce from 17 years to 16 years.

Economist Alex Durante from the Tax Foundation warns, “In 2026, families may face higher tax liabilities unless Congress extends the provisions introduced in 2017.”

Impact on Families

This potential reduction has sparked debates about whether the CTC should be extended or enhanced to continue supporting families. Historically, the CTC has benefited an estimated 40 million families annually, offering significant relief to households.

Additional Tax Credits for Families

In addition to the Child Tax Credit, families should explore other tax credit options for additional financial relief:

State-Level Child Tax Credits

Some states provide their own versions of the CTC, offering further support to residents. Families should check with their state tax offices for eligibility and available benefits.

Earned Income Tax Credit (EITC)

The Earned Income Tax Credit (EITC) has seen increased maximum amounts for 2025, benefiting low- to middle-income families by reducing tax liabilities and offering refunds.

Claiming the Child Tax Credit

To claim the CTC, taxpayers need to:

1. Report qualifying children on their federal income tax return (Form 1040).
2. Complete Schedule 8812, which details credits for qualifying children and other dependents.
3. Use tax preparation software or consult a tax professional to ensure all eligible credits are claimed.

Key Information at a Glance

Aspect	Details
Maximum Credit Per Child	$2,000
Refundable Portion	$1,700 (for 2024 and 2025)
Income Thresholds	$200,000 for individuals; $400,000 for couples
Qualifying Age	Under 17
Future Changes	Potential drop to $1,000 credit and age limit reduction to 16 after 2025, pending Congress action

The upcoming changes to the Child Tax Credit (CTC) highlight the importance of staying informed about tax benefits and preparing for potential future shifts. While the refundable portion remains stable for 2024 and 2025, families should be aware of the possibility of reduced benefits in 2026 if Congress does not intervene.

Exploring additional credits, such as state-level CTCs and the Earned Income Tax Credit, can provide further financial support. By staying proactive and leveraging available resources, families can maximize their tax refunds and ensure greater financial stability.

FAQs

What is the maximum Child Tax Credit available for 2024?

The maximum credit for each qualifying child is $2,000, with a refundable portion of $1,700 for eligible taxpayers.

How does the refundable portion of the CTC work?

The refundable portion, known as the Additional Child Tax Credit, is available to those earning at least $2,500 annually and allows families to claim up to $1,700 if their tax liability is below this amount.

Will the CTC change after 2025?

If Congress does not extend the provisions of the 2017 Tax Cuts and Jobs Act, the maximum credit will revert to $1,000 per child, and the qualifying age will decrease to 16 years.