What changed in 2025
The 2025 tax legislation made the expanded credit permanent, raised the per-child amount to $2,200 beginning with 2025 returns, and indexed it for inflation going forward. The $200,000 / $400,000 phase-out thresholds were made permanent at the same time. Returns for 2024 and earlier still use the $2,000 figure, which matters when amending.
Qualifying child tests
Must be under 17 at year-end, U.S. citizen with valid SSN, claimed as dependent, lived with you more than half the year, and not have provided more than half of their own support.
Phase-out thresholds
Begins at $200,000 AGI (single/HoH) or $400,000 (MFJ). Credit reduces by $50 for each $1,000 over the threshold. Because the reduction applies to the combined credit for all qualifying children, larger families keep some credit further up the income scale.
The refundable piece
The Additional Child Tax Credit refunds up to $1,700 per child (2025) when the credit exceeds your tax liability, but it phases in at 15% of earned income above a $2,500 floor. Households with substantial wages get the full refundable amount; households with little earned income may not, even with the same number of children. That earned-income mechanic is why two similar-looking families can see different refunds.
The $500 credit for everyone else
Dependents who miss the under-17 cutoff aren't worthless on the return. The Credit for Other Dependents provides $500, nonrefundable, for a 17-year-old, a college student you still support, or a parent who qualifies as your dependent. Same phase-out thresholds as the main credit.
Documentation and common snags
The child's SSN must be issued by the due date of the return, including extensions; an ITIN or a late-issued SSN doesn't work for the CTC. For divorced or separated parents, the custodial parent claims by default, and only a signed Form 8332 moves the credit to the other household. Mismatched SSNs and duplicate claims between parents are the two errors that reliably freeze processing.
Common questions
- Is the credit refundable?
- Partially. Up to $1,700 per child comes back through the Additional Child Tax Credit for 2025, subject to the earned-income phase-in. The remainder only offsets tax you owe.
- Can both divorced parents claim the same child?
- No. The custodial parent has the default claim, and Form 8332 is the only mechanism that transfers it. When both parents claim the same SSN, the IRS processes the first return and rejects or examines the second.
- My child turned 17 in December. Any credit?
- Not the Child Tax Credit; the under-17 test applies at year-end. The $500 Credit for Other Dependents usually applies instead.
- Do I need income to get the refundable part?
- Yes. The refundable portion phases in on earned income above $2,500, so a year with no wages or self-employment income can zero it out even with qualifying children.
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