About 48 million low-income families benefit from the Child Tax Credit (CTC), which helps them pay for things like their children’s education, housing, and food. The CTC is currently available to adults with eligible dependents under 17 and can be claimed as a nonrefundable tax payment. However, Americans need to know that the Internal Revenue Service (IRS) announced a few weeks ago that the child tax credit for the tax year 2025, which will apply to taxes filed in April 2026, will have a maximum refundable portion of $1,700 and a cap of $2,000 that may lower your tax bill dollar for dollar.
One of the most effective instruments in the country for giving tens of millions of families some assistance and breathing room while raising children is the Child Tax Credit. It has also been demonstrated to be among the best instruments ever developed for reducing child poverty. Established in 1997, the credit presently provides around 40 million families with up to $2,000 per child per year. Families with eligible children can receive tax relief through the Child Tax Credit. However, keep in mind that you can still be eligible for CTC even if you don’t file a tax return. A completed Schedule 8812, Credits for Qualifying Children and Other Dependents, must be attached to Form 1040, U.S.
The IRS confirmed a new child tax credit for eligible Americans
In 2025, the Child Tax Credit will continue to be available at an income level of $400,000 for married taxpayers filing jointly. For all other filers, the income threshold will remain at $200,000. To claim this payment, individuals should fill out the normal Child Tax Credit Worksheet (included in the instructions for Form 1040 or 1040-SR) on the federal income tax return. A variety of criteria, including the child’s age, relationship to the applicant, and income requirements, must be fulfilled to qualify. Here are the main requirements they will need to consider according to the IRS:
- The Social Security Administration must provide a Social Security number to an eligible child on the due date of the tax return (including extensions).
- The eligible child must be less than 17 years old.
- Meet the relationship and residency standards to get a consistent definition of a qualified child.
- Contribute no more than half of their support during the tax year.
- Lived in your household for at least half of the taxable year, except if the child was born or died during the year, was temporarily absent, kidnapped, or disappeared, or was a child of divorced or separated parents.
- Be claimed as a dependent upon your return.
- Do not submit a joint return for the year (or simply for a refund of withheld or anticipated tax).
- Be a US citizen, national, or resident alien.
- You must have a Social Security Number issued by the Social Security Administration by the tax return’s due date (including extensions).
Why is the child tax credit (CTC) from the IRS important for millions of American families?
The Child Tax Credit (CTC) saw unprecedented growth as part of the American Rescue Plan. For the first time, the entire CTC was distributed to all families in need, meaning that the families most in need did not receive the smallest amount. For the first time, the CTC was paid out in monthly installments on the same day each month. The installments were typically paid by direct deposit. The CTC made more available to support young children for the first time. The outcomes were significant. The extended CTC was given to more than 60 million children, giving tens of millions of working families much-needed breathing room.
Furthermore, it significantly reduced child poverty. Black, Hispanic, Asian, and Native American children all saw record lows in child poverty, while the expansion reduced child poverty by almost half to a record low of 5.2%. Additionally, the American Rescue Plan resulted in record decreases in child poverty in Puerto Rico in 2021 and permanently granted all Puerto Rican families with children the same eligibility for the CTC as other American households.