List of Non-Refundable Tax Credits to Reduce Your Tax

Understanding Non-Refundable Tax Credits

A non-refundable tax credit directly reduces your income tax liability on a dollar-for-dollar basis. Its core principle is that it can lower the amount of tax you owe to zero, but it cannot provide you with a monetary refund. For example, if you owe $1,000 in taxes and qualify for a $1,200 non-refundable credit, your tax bill is eliminated, but you do not receive the remaining $200.

This differs from refundable credits, which pay out any excess amount to the taxpayer. It also differs from tax deductions, which only lower your taxable income rather than reducing your tax bill directly. The IRS applies non-refundable credits to your tax liability before applying any refundable credits.

Common Non-Refundable Credits for Individuals and Families

Child and Dependent Care Credit

Parents who pay for care for a qualifying person to allow them to work or look for work may be eligible for this credit. A qualifying person is a dependent child under age 13, or a spouse or other dependent who is physically or mentally incapable of self-care. To claim this credit, you must have earned income and, if married, file a joint return.

The credit is a percentage of your work-related care expenses, with a maximum of $3,000 in expenses for one qualifying person or $6,000 for two or more. The percentage applied ranges from 20% to 35%, based on your adjusted gross income (AGI), with those with an AGI over $43,000 limited to 20%.

Credit for Other Dependents

The Credit for Other Dependents is valued at up to $500 for each eligible dependent who cannot be claimed for the Child Tax Credit. This includes children age 17 or older or other qualifying relatives, such as an elderly parent you support. To qualify, the dependent must be a U.S. citizen, U.S. national, or U.S. resident alien with a Social Security Number or Individual Taxpayer Identification Number.

You must also provide more than half of the dependent’s financial support for the year. The credit begins to phase out for taxpayers with a modified adjusted gross income (MAGI) over $200,000, or $400,000 for those married filing jointly.

Adoption Credit

The Adoption Credit helps offset the costs of adopting a child. For tax year 2025, the maximum credit is $17,280 per eligible child, who is an individual under age 18 or someone physically or mentally incapable of self-care. Qualified expenses include adoption fees, court costs, and attorney fees. This credit is subject to income limitations, beginning to phase out for taxpayers with a MAGI between $259,190 and $299,190 for 2025.

If your tax liability is less than the full credit, you can carry the unused portion forward for up to five years. Those adopting a child with special needs from U.S. foster care may claim the maximum credit regardless of actual expenses.

Lifetime Learning Credit

The Lifetime Learning Credit (LLC) is for qualified tuition and fees for courses taken to acquire job skills or as part of a postsecondary degree program. There is no limit on the number of years you can claim the LLC. The credit is 20% of the first $10,000 in educational expenses, for a maximum of $2,000 per tax return.

To claim the full credit, your MAGI must be $80,000 or less for single filers, or $160,000 or less for joint filers, and you cannot file as married filing separately. The credit is phased out for single filers with a MAGI between $80,000 and $90,000 and for joint filers with a MAGI between $160,000 and $180,000.

Retirement Savings Contributions Credit (Saver’s Credit)

The Retirement Savings Contributions Credit, or Saver’s Credit, helps mid- and low-income taxpayers save for retirement. To be eligible, you must be at least 18 years old, not a student, and not claimed as a dependent on someone else’s return. The credit is for contributions to a 401(k), 403(b), IRA, or other qualified retirement plan.

The credit amount is 50%, 20%, or 10% of the first $2,000 ($4,000 if married filing jointly) contributed. For 2025, a single filer with an AGI up to $23,750 qualifies for the 50% rate, as does a married couple with an AGI up to $47,500. The credit phases out completely for single filers with an AGI over $39,500 and joint filers with an AGI over $79,000.

Credit for the Elderly or the Disabled

This credit is available to taxpayers who are either age 65 or older or are retired on permanent and total disability. To qualify, you must meet specific income limits that consider both your AGI and the amount of nontaxable Social Security, pension, or disability income you receive. The calculation for this credit is complex.

It begins with a base amount of $5,000 for a single individual or $7,500 for a married couple where both spouses qualify. This base is then reduced by your nontaxable benefits and a portion of your AGI, so many who meet the age or disability test do not qualify for the credit.

Child Tax Credit

The Child Tax Credit is worth up to $2,000 per qualifying child for the 2025 tax year. A qualifying child must be under age 17 at the end of the tax year and meet several other tests related to relationship, support, and residency. The credit is subject to income phase-outs, beginning for taxpayers with a MAGI of $200,000 ($400,000 for joint filers).

While a portion of the Child Tax Credit can be refundable through the Additional Child Tax Credit (ACTC), the initial $2,000 credit is non-refundable. If the credit reduces your tax liability to zero, you may then be able to claim the refundable portion, which is worth up to $1,700 per child in 2025.

Non-Refundable Credits for Homeowners and Investors

Residential Clean Energy Credit

Homeowners who invest in clean energy may be eligible for the Residential Clean Energy Credit. This credit is equal to 30% of the cost of new, qualified clean energy property for your home, with the 30% rate applying to property placed in service between 2022 and 2032. Qualifying expenses include the costs of solar electric panels, solar water heaters, wind turbines, geothermal heat pumps, and battery storage technology.

While the credit is non-refundable, if it is more than the tax you owe, you can carry the unused portion forward to future tax years.

Mortgage Interest Credit

The Mortgage Interest Credit is for homeowners who were issued a Mortgage Credit Certificate (MCC) by a state or local government. This credit should not be confused with the more widely known mortgage interest deduction. An MCC is issued to low- and moderate-income, first-time homebuyers to help them afford homeownership.

The credit amount is calculated by multiplying the mortgage interest paid during the year by the certificate credit rate on the MCC, which ranges from 10% to 50%. The credit is capped at $2,000 per year if the certificate rate is higher than 20%. Any remaining mortgage interest paid can still be claimed as an itemized deduction.

Foreign Tax Credit

U.S. citizens and resident aliens who have paid income taxes to a foreign country on foreign-source income may claim the Foreign Tax Credit to avoid double taxation. This credit reduces your U.S. income tax liability by the amount of foreign taxes you paid. Taking the credit is an alternative to deducting foreign income taxes as an itemized deduction and is often more beneficial.

The credit calculation has limitations to ensure it does not offset U.S. tax on U.S.-source income. Any foreign taxes paid that exceed the limitation can be carried back one year and then carried forward for up to ten years.