The child tax credit reduces your federal income tax by up to $2,000 for each qualifying child under age 17. It’s one of the largest tax breaks available to families, and a portion of it can come back to you as a refund even if you don’t owe that much in taxes. Here’s how the credit works, who qualifies, and how to claim it.
How Much the Credit Is Worth
The child tax credit is worth up to $2,000 per qualifying child. It’s a credit, not a deduction, which means it reduces your tax bill dollar for dollar rather than simply lowering your taxable income. If you owe $5,000 in federal taxes and have two qualifying children, the credit could cut that bill to $1,000.
Not all of that $2,000 is refundable, though. The refundable portion, called the Additional Child Tax Credit (ACTC), allows you to receive money back if the credit exceeds what you owe. For recent tax years, the maximum refundable amount has been $1,700 per child. The remaining $300 per child can only offset taxes you already owe. To qualify for the refundable portion, you need to have earned income above $2,500.
The distinction matters most for lower-income families. If your tax liability is already zero before applying the credit, you won’t get the full $2,000 per child as a refund. You’ll receive up to the refundable cap, calculated as 15% of your earned income above $2,500. So if you earned $20,000, the calculation would be 15% of $17,500, or $2,625, which would be capped at the refundable maximum per child.
Who Counts as a Qualifying Child
For the 2025 tax year, your child must meet all of the following requirements:
- Age: Under 17 at the end of the tax year. A child who turns 17 on December 31 does not qualify.
- Relationship: Your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-sibling, or a descendant of any of these (such as a grandchild, niece, or nephew).
- Residency: The child must have lived with you for more than half the tax year.
- Support: The child cannot have provided more than half of their own financial support during the year.
- Filing status: The child cannot file a joint return for the year, unless they’re filing only to claim a refund.
- Citizenship: The child must be a U.S. citizen, U.S. national, or U.S. resident alien and must have a valid Social Security number issued before the due date of your return.
That last point trips up some families. An Individual Taxpayer Identification Number (ITIN) won’t work for the child tax credit. If your child has an ITIN instead of a Social Security number, they may still qualify for the separate Credit for Other Dependents, which is smaller.
Income Phase-Outs
The credit starts to shrink once your modified adjusted gross income (MAGI) passes certain thresholds. For single filers and heads of household, the phase-out begins at $200,000. For married couples filing jointly, it starts at $400,000. Your credit is reduced by $50 for every $1,000 of income above the threshold.
To put that in practical terms: a married couple with two qualifying children and a MAGI of $440,000 would be $40,000 over the threshold. That’s 40 increments of $1,000, which means a $2,000 reduction (40 × $50). Their credit would drop from $4,000 to $2,000. At $480,000, the credit would phase out entirely.
These thresholds are relatively generous compared to many other tax benefits, so most families with children under 17 receive at least some credit.
The Credit for Other Dependents
If your child is 17 or older, or doesn’t have a Social Security number, they won’t qualify for the child tax credit. But they may qualify for the Credit for Other Dependents (ODC), which is worth up to $500 per dependent. This credit also covers dependent parents and other qualifying relatives you support.
The ODC uses the same income phase-out thresholds: $200,000 for single filers and $400,000 for joint filers. Unlike the child tax credit, however, the ODC is entirely nonrefundable. It can reduce what you owe to zero, but it won’t generate a refund on its own.
How to Claim the Credit
You claim the child tax credit when you file your federal tax return. The key form is Schedule 8812 (Credits for Qualifying Children and Other Dependents), which attaches to your Form 1040. This schedule handles the math for both the child tax credit and the Credit for Other Dependents. If you use tax software, the program will fill out Schedule 8812 automatically based on the dependents you’ve listed and your income.
Make sure each qualifying child is listed on your return with their correct Social Security number. If you’re claiming the Additional Child Tax Credit (the refundable portion), Schedule 8812 will also calculate that amount. The IRS has historically processed refunds that include the ACTC on a slightly delayed timeline, with refunds typically arriving no earlier than mid-February even for early filers.
When the Credit Applies During the Year
The child tax credit is an annual credit. You claim it once per year on your tax return, not month by month. However, if you want to see the benefit in your paychecks throughout the year rather than waiting for a lump sum at tax time, you can adjust your W-4 withholding with your employer. Reducing your withholding to account for the credit you expect to receive means more take-home pay each pay period, though you’ll want to be careful not to under-withhold and end up owing when you file.
The credit applies based on your child’s status at the end of the tax year. A baby born on December 31 qualifies for the full credit for that year. A child who turns 17 at any point during the year, including January 1, does not qualify for that tax year.
Divorced or Separated Parents
Only one parent can claim the child tax credit for a given child in a given year. Generally, the credit goes to the parent the child lived with for more than half the year (the custodial parent). If the child split time equally, the IRS uses tiebreaker rules, typically awarding the claim to the parent with the higher adjusted gross income.
A custodial parent can release their claim to the noncustodial parent by signing IRS Form 8332. This is common in divorce agreements where one parent agrees to let the other claim the child in alternating years. The form only releases the dependency exemption and the child tax credit. It does not transfer other tax benefits like head of household filing status or the earned income credit, which still follow the residency test.