Many parents with children under age 17 can claim the child tax credit worth up to $2,000 per child for tax year 2024. But that could change after 2025, affecting returns filed in 2027.
That's because the 2017 Tax Cuts and Jobs Act enacted by President Donald Trump during his first term in office is set to expire at the end of 2025. Prior to the TCJA, the maximum credit families could claim was $1,000 per qualifying dependent.
Additionally, while the credit currently starts phasing out for parents earning at least $200,000 a year — or $400,000 for those married filing jointly — that threshold will drop to $75,000 for individuals and $110,000 for couples if Congress does not renew the TJCA or enacts different CTC guidelines for the coming years.
Here's what families need to know about claiming the CTC on their taxes and how it may change in the future.
The child tax credit under TCJA
When families file their 2024 taxes this year and 2025 taxes next year, they will be able to reduce their tax bill by up to $2,000 per qualifying dependent child. A qualifying child is under age 17; is either your own child, step-child or other relative; lives with you at least half of the tax year and is claimed as your dependent, among other requirements, per the Internal Revenue Service.
The credit is reduced by $50 for every $1,000 you earn over the phase-out limits of $200,000 for individuals or $400,000 for couples. Though the CTC is technically not a refundable credit, a portion known as the additional child tax credit is refundable.
Families whose tax bills are lower than the amount they'd receive from the CTC can get up to $1,700 per child as a refund through the ACTC for tax years 2024 and 2025. A family that owes $800 in taxes and qualifies for a $2,000 CTC benefit could receive a $1,200 refund, for example.
Taxpayers with children who don't earn enough money to be required to file a tax return — at least $14,600 for individuals in 2024, $21,900 for heads of household or $29,200 for couples married filing jointly — may still want to file because they could be eligible for a partial refund through the ACTC. These families need to earn at least $2,500 a year to be eligible for a refund, however.
The future of the CTC
Though President Trump has said he wants to continue the TCJA beyond its 2025 expiration date, Congress has not yet passed updated tax legislation.
In early 2024, the House of Representatives passed the Tax Relief for American Families and Workers Act, which would have brought the maximum refundable ACTC amount up to $1,900 for 2024 and started indexing the maximum CTC amount to inflation each year. But the Senate rejected the bill, with Republicans citing concerns over a number of its provisions.
While both political parties support some version of permanent expansion for the CTC, they have thus far failed to come to a consensus on what that looks like.
It is likely the Republican-controlled government will move to extend or make some provisions of the TJCA permanent, but that may be difficult to accomplish while also trying to reduce the federal deficit.
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