8.4 Child Tax Credit & Additional CTC
Key Takeaways
- For 2025 the Child Tax Credit is $2,200 per qualifying child under 17 (up from $2,000), with up to $1,700 refundable as the Additional Child Tax Credit (ACTC) — OBBBA permanence + inflation
- Phase-out begins at MAGI $200,000 (Single/HoH/MFS) or $400,000 (MFJ); credit is reduced $50 for each $1,000 (or fraction) over the threshold
- OBBBA NEW SSN RULE — every filer (and both spouses on MFJ) must have a valid Social Security Number; the qualifying child must also have a valid SSN issued by the return due date. ITIN filers and ITIN children are excluded from the $2,200 CTC and $1,700 ACTC
- Credit for Other Dependents (ODC) — $500 nonrefundable for dependents who do not qualify for CTC (e.g., children with ITINs, dependents 17+); subject to the same phase-out thresholds
- ACTC = 15% of earned income over $2,500, capped at $1,700 per qualifying child; OBBBA made the entire CTC structure permanent — no scheduled 2026 reversion to $1,000
Child Tax Credit & Additional Child Tax Credit (2025)
The Child Tax Credit (CTC) is the most significant family-related tax benefit in the U.S. tax code. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, made several changes for tax year 2025 and beyond:
- Raised the maximum credit from $2,000 to $2,200 per qualifying child (and indexes it for inflation going forward)
- Made the elevated phase-out thresholds ($200K / $400K) permanent — no scheduled 2026 reversion to $1,000 / pre-TCJA thresholds
- Added a new SSN requirement: every filer (and both spouses on MFJ) must have a valid Social Security Number
Overview of Child Tax Credit for 2025
| Credit Component | Amount | Refundable? |
|---|---|---|
| Child Tax Credit (CTC) | Up to $2,200 per qualifying child | Partially — up to $1,700 as ACTC |
| Additional Child Tax Credit (ACTC) | Up to $1,700 per qualifying child | Yes — fully refundable |
| Credit for Other Dependents (ODC) | $500 per qualifying dependent | No — nonrefundable only |
The $2,200 CTC is not fully refundable. The nonrefundable portion ($500 per child) can only reduce tax liability to zero. The remaining $1,700 may be received as a refund through the ACTC.
Qualifying Child Requirements (The 6 Tests)
To claim the $2,200 Child Tax Credit, a child must meet ALL six requirements:
| Test | Requirement | Details |
|---|---|---|
| 1. Age | Under age 17 | Must be under 17 at the end of the tax year (Dec 31, 2025) |
| 2. Relationship | Your child, stepchild, foster child, sibling, half-sibling, step-sibling, or any of their descendants | Includes adopted children placed for adoption |
| 3. Residency | Lived with you more than half the year | Temporary absences (school, illness, military) count as living with you |
| 4. Support | Child did NOT provide more than half of own support | Child cannot be self-supporting |
| 5. Citizenship | U.S. citizen, U.S. national, or U.S. resident alien | Proper immigration status required |
| 6. SSN | Valid SSN issued by the return due date (with extensions) | OBBBA 2025: ITINs DO NOT qualify for the $2,200 CTC or $1,700 ACTC |
NEW OBBBA SSN Requirement (Filer Side)
Beginning with the 2025 tax year, the filing taxpayer (and both spouses on a joint return) must each have a valid Social Security Number to claim the CTC. Prior to OBBBA, the parent could file with an ITIN as long as the child had an SSN. That option ended. A return where either spouse has only an ITIN cannot claim the $2,200 CTC for any child, regardless of the child's SSN status (though the $500 ODC may still apply).
Phase-Out Rules
| Filing Status | Phase-Out Begins | Reduction Rate |
|---|---|---|
| Single | $200,000 MAGI | $50 per $1,000 (or fraction) over threshold |
| Head of Household | $200,000 MAGI | $50 per $1,000 (or fraction) over threshold |
| Married Filing Jointly | $400,000 MAGI | $50 per $1,000 (or fraction) over threshold |
| Married Filing Separately | $200,000 MAGI | $50 per $1,000 (or fraction) over threshold |
| Qualifying Surviving Spouse | $400,000 MAGI | $50 per $1,000 (or fraction) over threshold |
Formula: Credit Reduction = ⌈(MAGI − Threshold) / $1,000⌉ × $50 (round UP any fraction)
Phase-Out Calculation Example
Scenario: Tom and Lisa are MFJ with 2 qualifying children. MAGI = $425,000.
- Base Credit: 2 × $2,200 = $4,400
- Excess over threshold: $425,000 − $400,000 = $25,000
- $1,000 increments: 25
- Reduction: 25 × $50 = $1,250
- Final Credit: $4,400 − $1,250 = $3,150
Additional Child Tax Credit (ACTC) — The Refundable Portion
ACTC allows lower-income taxpayers to receive a refund for unused CTC.
- Maximum refundable amount: $1,700 per qualifying child
- Earned income threshold: Earned income must exceed $2,500
- Formula: 15% × (Earned Income − $2,500), capped at $1,700/child
ACTC = Lesser of: (1) Unused CTC after reducing tax to zero, OR (2) 15% × (Earned Income − $2,500)
ACTC Example
Scenario: Maria is single with 2 qualifying children. Wages = $18,000; tax liability before credits = $500.
- Maximum CTC: 2 × $2,200 = $4,400
- Nonrefundable portion used: $500 (reduces tax to zero)
- Unused CTC: $4,400 − $500 = $3,900
- Maximum ACTC: 2 × $1,700 = $3,400
- 15% × ($18,000 − $2,500) = 15% × $15,500 = $2,325
- ACTC: lesser of $3,400 or $2,325 = $2,325 refund
Credit for Other Dependents (ODC)
$500 nonrefundable credit for dependents who do NOT qualify for CTC:
- Children age 17 or older
- Children with ITINs (instead of SSNs)
- Dependent parents and other qualifying relatives
- College students age 19–23 supported by the taxpayer
ODC uses the same $200,000 / $400,000 phase-out thresholds and the same $50-per-$1,000 reduction.
SSN vs. ITIN: Critical Distinction
| Identifier | $2,200 CTC | $1,700 ACTC | $500 ODC |
|---|---|---|---|
| Filer has SSN, child has SSN | Yes | Yes | N/A |
| Filer has SSN, child has ITIN | No | No | Yes |
| Filer has ITIN (any child) | No (OBBBA 2025 rule) | No | ODC available if other dependency tests met |
The SSN must be valid for employment and issued by the original or extended due date of the return.
Schedule 8812 — Credits for Qualifying Children and Other Dependents
All CTC, ACTC, and ODC calculations are completed on Schedule 8812.
| Part | Purpose | Credit Type |
|---|---|---|
| Part I | CTC and ODC | Nonrefundable |
| Part II-A | ACTC | Refundable |
| Part II-B | Alternative calculation for filers with 3+ children | Refundable (uses SS tax) |
| Part II-C | Final ACTC amount | Refundable |
Where it goes on Form 1040:
- Nonrefundable CTC/ODC: Line 19
- Refundable ACTC: Line 28
Historical Context: CTC Evolution
| Period | Maximum CTC | Refundable Portion | Age Limit |
|---|---|---|---|
| 1998–2000 | $500 | None | Under 17 |
| 2001–2017 | $1,000 | Up to $1,000 (ACTC) | Under 17 |
| 2018–2020 (TCJA) | $2,000 | Up to $1,400 | Under 17 |
| 2021 (ARPA — COVID) | $3,000 / $3,600 | Fully refundable | Under 18 |
| 2022–2024 | $2,000 | Up to $1,600–$1,700 | Under 17 |
| 2025+ (OBBBA permanent) | $2,200 (indexed) | Up to $1,700 (indexed) | Under 17 |
OBBBA replaced the prior TCJA sunset language with permanent rules. The CTC will continue to be indexed for inflation in $100 increments going forward.
EA Exam Tips — Child Tax Credit
- 2025 maximum is $2,200 per qualifying child (up from $2,000 — OBBBA permanent)
- $1,700 refundable as ACTC (unchanged from 2024)
- Age 17 cutoff — child must be under 17 on December 31
- NEW OBBBA rule: BOTH the filer and the qualifying child need valid SSNs; ITIN filers can no longer claim CTC
- Phase-out thresholds: $200,000 (Single/HoH/MFS) and $400,000 (MFJ) — permanent post-OBBBA
- $50 reduction per $1,000 — round UP any partial $1,000
- ACTC formula: 15% × (Earned Income − $2,500), max $1,700/child
- Residency: must be more than half the year (not just half)
- ODC: $500, nonrefundable, applies to ITIN children and 17+ dependents
- 3+ children exception: alternative ACTC calculation (Part II-B) using SS tax paid
For 2025, what is the maximum Child Tax Credit per qualifying child, and how much of that amount is potentially refundable as the Additional Child Tax Credit (ACTC)?
Carlos and Elena are MFJ with 3 qualifying children (all under 17, valid SSNs). Their 2025 MAGI is $450,000. What is their Child Tax Credit?
In 2025, a taxpayer has a 16-year-old son who has an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number. The child meets all other qualifying child requirements. What tax credit, if any, can the taxpayer claim for this child?