How Much Is the IRS Child Tax Credit?

The Child Tax Credit is a tax benefit from the Internal Revenue Service (IRS) designed to help offset the expenses of raising children. This credit directly reduces the amount of federal income tax a qualifying family owes, potentially on a dollar-for-dollar basis. Its primary purpose is to support parents and guardians in meeting the costs of providing for their dependents.

Maximum Credit Value

For the 2024 tax year, which is filed in 2025, the Child Tax Credit offers a maximum value of $2,000 for each qualifying child. This is the highest amount per child before any potential reductions due to income are considered.

A smaller, nonrefundable credit of up to $500 is also available for other dependents who do not meet the criteria to be a qualifying child. This can include older children or qualifying relatives who are supported by the taxpayer.

Qualifying Child Requirements

To be eligible for the Child Tax Credit, a child must meet several specific tests as defined by the IRS. The child must also have a valid Social Security number to be claimed for the credit. The primary tests are:

• The child must have been under the age of 17 at the end of the tax year; for the 2024 tax return, the child must not have turned 17 on or before December 31, 2024.
• The child must be the taxpayer’s son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, or a descendant of any of these individuals, such as a grandchild or nephew.
• The child must have lived with the taxpayer for more than half of the tax year, with exceptions for temporary absences like school or medical care.
• The child could not have provided more than half of their own financial support during the year.
• The child cannot file a joint tax return for the year, unless it is filed only to claim a refund of withheld income taxes or estimated taxes paid.

Calculating Your Credit with Income Limits

The amount of the Child Tax Credit a taxpayer receives is directly tied to their income. The calculation begins with determining the taxpayer’s Modified Adjusted Gross Income (MAGI), which is their Adjusted Gross Income (AGI) from their tax return with certain deductions added back.

The credit begins to phase out, or decrease, for taxpayers with incomes above certain thresholds. For the 2024 tax year, this reduction starts for married couples filing jointly with a MAGI above $400,000. For all other filing statuses, including single and head of household, the phase-out begins when MAGI exceeds $200,000.

The total credit amount is reduced by $50 for every $1,000 (or fraction thereof) that the taxpayer’s MAGI is over the applicable threshold. For example, a single filer with one qualifying child and a MAGI of $205,000 would see their $2,000 credit reduced by $250.

How to Claim the Credit on Your Tax Return

Taxpayers claim the Child Tax Credit when filing their annual federal income tax return using Form 1040. To calculate the specific amount of the Child Tax Credit and any related credits, taxpayers must complete and attach IRS Schedule 8812, “Credits for Qualifying Children and Other Dependents.” This schedule guides the filer through the necessary calculations, including the income-based phase-out rules.

The non-refundable portion of the credit can reduce a taxpayer’s liability to zero, but no further. If the credit amount is greater than the taxes owed, a portion of it may be refundable.

This refundable part is known as the Additional Child Tax Credit (ACTC). For the 2024 tax year, the ACTC is worth up to $1,700 per qualifying child and can result in a tax refund even if the taxpayer owes no income tax. To qualify for the ACTC, a taxpayer must have earned income of at least $2,500.