What if the money you could claim on your taxes for your children nearly doubled next year? Would you know how to take full advantage of it? With upcoming changes in the Child Tax Credit (CTC) and shifting IRS guidelines, understanding how to file taxes correctly is more important than ever.
According to Census.gov, 39% of U.S. family households included children under 18 in 2024, meaning millions of American families stand to be affected. In this article, you’ll learn what the Child Tax Credit increase could mean for you in 2025, who qualifies, how to claim it, and how it compares to other tax credits for families.
How has the Child Tax Credit changed since the 2017 Tax Cuts and Jobs Act?
The 2017 Tax Cuts and Jobs Act (TCJA) doubled the child tax credit from $1,000 to $2,000 per qualifying child and added a refundable portion of up to $1,400, now $1,700 for 2024 and 2025. It also raised income limits, allowing more middle-and high-income taxpayers, including business owners, to benefit.
Why is the 2025 tax year critical for claiming the full child tax credit?
The expanded child tax credit ends after 2025 unless Congress extends it. If it expires, the credit amount drops back to $1,000, and phase-out thresholds tighten, cutting eligibility for many. You could lose $1,000 per child on your 2026 return if you don’t plan ahead.
How Much Can You Claim Per Child for the 2024 and 2025 Tax Years?
- $2,000 per child under age 17
- Up to $1,700 refundable (if you qualify for the Additional Child Tax Credit)
- Must earn at least $2,500 to claim the refundable credit
This matters if you’re offsetting federal tax from business income or looking for end-of-year tax relief.
What happens to the credit amount after the 2025 expiration date?
If no action is taken by lawmakers:
- The credit reverts to $1,000
- Refundable portion vanishes for most
- Income limits fall drastically, impacting higher earners
Start adjusting your 2025 tax strategy now while the higher credit amount is still locked in.
What makes a child a ‘qualifying child’ for tax purposes?
To claim the credit, your child must:
- Be under 17 at the end of the tax year
- Be your biological, step, foster child, or dependent relative
- Live with you more than half of the tax year
- Have a valid Social Security number
- Be a U.S. citizen or legal resident
- Not file a joint return (unless for refund purposes)
Even if you’re self-employed, if your child meets all this, you’re able to claim the credit.
What income levels qualify for the full credit amount?
You get the full $2,000 credit if your modified adjusted gross income (MAGI) is:
- $200,000 or less (single filer)
- $400,000 or less (married filing jointly)
The credit phases out by $50 for every $1,000 above these limits, something to watch if your business income fluctuates.
Further Reading: Discover how much the child tax credit is worth in 2025
How to File a Tax Return and Claim the Child Tax Credit Correctly
You need to:
- File Form 1040 (U.S. Individual Income Tax Return)
- Attach Schedule 8812 to report your children and calculate the credit
Miss either, and the IRS won’t process your credit claim.
Can you still get a refund if you don’t owe income tax?
Yes, but only if you earned at least $2,500. That unlocks the refundable portion of the child tax credit (up to $1,700 per child).
Even if your income tax is zero, file a tax return to access this valuable tax benefit.
What Other Federal Tax Credits Are Available for Families in 2024 and 2025?
Besides the child tax credit, check if you qualify for:
- Earned Income Tax Credit (EITC) – for low to moderate-income earners, including small business owners
- Child and Dependent Care Credit – if you pay for daycare so both spouses can work
- Credit for Other Dependents (ODC) – for kids over 17 or dependent parents
These credits can stack with the CTC to boost your tax relief.
How do refundable and non-refundable tax credits differ?
- Refundable credits (like the Additional Child Tax Credit) give you money back, even if your tax bill is $0
- Non-refundable credits only reduce what you owe, but don’t create a refund
If you're planning year-end tax filing, this distinction affects how much cash actually hits your bank account.
Further Reading: Discover how taxpayers may qualify for child tax credits
Is the Child Tax Credit Increasing or Decreasing After 2025?
Will the expanded child tax credit continue under new tax policy?
That’s still undecided. A bill from the House Ways and Means Committee the Tax Relief for American Families and Workers Act, would have increased the refundable credit and tied future amounts to inflation. It didn’t pass the Senate. Keep an eye on 2025 legislation.
How would reduced income thresholds affect high-earning taxpayers?
If the TCJA expires:
- Single filers lose full credit above $75,000
- Joint filers lose it above $110,000
That means more business owners will get phased out, even with just moderate business income.
Why the Child Tax Credit Is More Than a Tax Break
According to the Center on Budget and Policy Priorities, the expanded credit reduced child poverty by over 40% in 2021. Fewer families needed public assistance, and children in eligible households had better health and school outcomes.
Why business owners should factor this into their tax preparation?
If you have kids and a growing business, this credit expansion is worth building into your 2024 and 2025 tax year planning.
It directly lowers your tax liability or boosts your refund, money that could go right back into your business or family.
Further Reading: Discover how the Child Tax Credit can benefit your family
Key Takeaways
- You can claim up to $2,000 per child for the 2025 tax year under current law.
- The child tax credit may drop to $1,000 per child if the TCJA isn’t renewed after 2025.
- To get the full credit, your income must stay under $200K (single) or $400K (joint).
- A portion of the child tax credit is refundable, even if you owe no tax.
- You must file a tax return and complete Schedule 8812 to claim the credit.
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