You can be eligible for extra Child Tax Credits if you reside in the appropriate state. These credits would boost your income for each dependent child, which could be helpful during tax season.
These federal and state credits provide a sizable refund for each child listed as a dependant, so reducing the financial strain on parents. We can investigate which CTCs are still in place and to which you could apply in the near future, even if the temporary increase of federal credit is set to expire in 2026.
In the US, tax credits are a form of financial assistance
Undoubtedly, American families with children who must pay for necessities like food, healthcare, education, and housing place a high value on the Child Tax Credits.
Recent studies demonstrate that the country’s child poverty rate dropped significantly as a result of the government credit increase in 2021. These payments helped almost 61 million children in the US by lowering child poverty rates by nearly 30%, according to a report from Columbia University’s Center on Poverty and Social Policy.
To refresh your memory, a Child Tax Credit, or CTC, is a tool that gives qualified taxpayers the opportunity to lower their tax obligations according to the number of dependent children they declare.
Originally established in 1997, this federal credit now offers up to $2,000 per kid, of which $1,600 may be refunded even in cases where no taxes are due. The remaining $400, on the other hand, is non-refundable and merely helps to reduce the tax liability.
This amount was set by the American Rescue Plan Act of 2021 and, barring a further extension by Congress, will remain in effect until December 31, 2025.
For each dependent child under 16, the credit will revert to its initial $1,000 value if no further extensions are granted.
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Some states now offer child tax credits
Families are further assisted by the 16 states that have established their own child tax credits in addition to the federal credit. Arizona, Colorado, Idaho, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oklahoma, Oregon, Utah, and Vermont are among these states.
States differ significantly in the specifics of these credits, including the amount provided, whether or not they are refundable, and the precise criteria for defining a dependent child.
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Credit Amounts and Eligibility by State
Each dependent kid under the age of 17 in Arizona is eligible for a $100 credit, which is non-refundable. California provides up to $1,117 per kid under six, with a $25,000 income restriction for the entire amount.
The credit, which is refundable and whose exact amount depends on income and marital status, can reach up to $3,200 per dependant under the age of sixteen in Colorado.
Illinois offers a credit equal to 20% of the state’s Earned Income Tax Credit, whereas Idaho offers $205 per dependent kid under the age of 17. Maryland provides $500 for each disabled child, whereas Maine provides $300 for each dependent child under the age of 17.
As long as the taxpayer’s income is below the stipulated restrictions, Minnesota gives $1,750 per child, whereas Massachusetts offers $180 for one child or $360 for two or more. For individuals making less than $30,000, New Jersey offers a credit of $500 per dependent kid under age six; this credit declines as income rises.
New York creates a credit based on a percentage of the federal credit, ensuring at least $100 per kid, while New Mexico provides between $75 and $175 every dependent child under 17.
To continue the list, Oklahoma provides a non-refundable credit equal to 5% of the federal child tax credit per household. It is crucial to remember that married couples filing jointly are not eligible if their gross income is more than $100,000.
Furthermore, Oregon offers $1,000 for each dependent child under five years old. This amount is refundable and limited to households earning less than $30,000.
Let’s continue by bringing up Utah, which offers $1,000 for each dependent child aged one to three. However, this credit drops by $10 for every $1 over a certain income threshold.
Last but not least, Vermont offers a $1,000 credit for each dependent kid under five that is refundable and available to taxpayers with earnings under $125,000.