What Is the Child Tax Credit?
In plain English
The Child Tax Credit is a tax credit of up to $2,000 per qualifying child under age 17 at the end of the tax year. Up to $1,700 of the credit is refundable through the Additional Child Tax Credit for families with lower tax liability. The credit phases out for single filers above $200,000 and joint filers above $400,000 in modified AGI.
Who Qualifies as a Child for the Child Tax Credit?
A qualifying child must be under 17 at year-end, claimed as your dependent, related to you (child, stepchild, foster child, sibling, or descendant), have a valid Social Security number, have lived with you for more than half the year, and not have provided more than half of their own support. Only one taxpayer can claim a child as a dependent in any given year.
How Does the Refundable Portion of the Child Tax Credit Work?
The Additional Child Tax Credit (ACTC) allows up to $1,700 of the unused Child Tax Credit to be refunded even if you owe no tax. The refundable amount is calculated as 15% of earned income above $2,500. Families with very low income or no tax liability receive a partial refund based on this formula rather than the full credit.
How Has the Child Tax Credit Changed in Recent Years?
The credit was temporarily expanded during the pandemic to $3,000 per child ($3,600 for children under 6) with monthly advance payments in 2021. It reverted to $2,000 for 2022 and subsequent years. Congress periodically debates expanding it again. The refundable portion limit has been adjusted several times, affecting lower-income families most significantly.
Frequently asked questions
Can divorced parents both claim the Child Tax Credit for the same child?
No. Only the custodial parent — or whichever parent claims the dependency exemption — may claim the Child Tax Credit. Divorced parents sometimes alternate years or agree in writing to transfer the dependency claim, but only one parent may use the credit per year per child.
Does the Child Tax Credit affect my eligibility for other credits?
Claiming the Child Tax Credit does not prevent you from claiming the Child and Dependent Care Credit or the Earned Income Tax Credit. These are separate credits based on different criteria, and many families qualify for multiple credits simultaneously.
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Related terms
Tax Credit
A tax credit directly reduces your tax bill dollar-for-dollar, making it more valuable than a deduction of the same amount. Credits can be refundable, nonrefundable, or partially refundable.
Earned Income Tax Credit (EITC)
The Earned Income Tax Credit is a refundable federal tax credit for low-to-moderate income workers that can significantly reduce or eliminate tax owed. It is one of the largest anti-poverty programs in the U.S. tax code.
Adjusted Gross Income (AGI)
Adjusted gross income is your total income minus specific above-the-line deductions. It is the key figure on your tax return that determines eligibility for many credits, deductions, and financial programs.
Tax Filing Status
Your tax filing status determines your tax bracket thresholds, standard deduction amount, and eligibility for various credits and deductions. Choosing the correct status is one of the most impactful decisions in tax planning.
Tax Refund
A tax refund is money the IRS returns to you when your total tax payments — through withholding or estimated payments — exceed your actual tax liability for the year.