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This tax season, some families could see even bigger tax breaks for their children thanks to changes in President Donald Trump’s “Big and Beautiful Bill.”
President Trump’s bill, signed into law in July, permanently increases the child tax credit cap from $2,000 to $2,200 per child through 2025. This value will be indexed to inflation from 2026.
If you previously qualified for the full $2,000 credit, experts say the update could result in an increased refund of $200 or a reduced tax bill of $200 per child on your 2025 return, depending on your circumstances.
According to the Tax Policy Center, about 90% of households with children received the child tax credit in 2025, with an average tax reduction of $2,520 per household.
Based on the latest IRS estimates, approximately 37 million returns claimed the child tax credit or other dependent tax credits during the 2022 tax year.
Here are some important things to know about tax breaks, including who is eligible and how the deduction is calculated.
Persons eligible for child tax credit
Families must meet certain rules to claim the child tax credit, including age, relationship, support, and residency requirements.
Children must have a valid Social Security number and be under 17 years of age at the end of 2025. If a married couple applies for the credit jointly, one applicant must also have a Social Security number. The IRS outlines other guidelines here.
The child tax credit begins to phase out or shrink once income exceeds $200,000 for single filers or $400,000 for married couples filing jointly.
“This is not based on the cost you incur,” Margot Crandall Hollick, a senior researcher at the Urban-Brookings Tax Policy Center, told CNBC. “It’s based on your income…and whether you have children who qualify.”
By comparison, another tax relief program for families, known as the Child and Dependent Care Tax Credit, provides partial relief for up to $6,000 in care costs for two or more “qualified individuals” (usually children under 13) if both parents who file taxes jointly earn income. Families with one eligible individual can consider up to $3,000 in care cost offsets.
How the child tax credit works
The child tax credit for 2025 is capped at a maximum of $2,200 per child. If your credits exceed the taxes you owe, you can claim a “refundable” portion of up to $1,700 per child, called the Additional Child Tax Credit (ACTC). Many low-income filers do not have to pay any tax balances.
“If you have the tax liability to make up that $500 difference, you get more benefits,” says Tommy Lucas, a certified financial planner with Moisand Fitzgerald Tamayo in Orlando, Florida. His firm ranks No. 69 on CNBC’s 2025 100 Financial Advisors list.
After the first $2,500 of earnings, the child tax credit is 15% of your adjusted gross income (AGI) until your tax deduction reaches $2,200. ACTC, on the other hand, is limited to 15% of earnings over $2,500.
A $2,500 minimum income and $1,700 reimbursement cap means millions of low-income households will not receive the full $2,200 payment in 2026, according to a January analysis by the Center on Budget and Policy Priorities.
