what is 2025 child tax credit

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01-12-2024

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The Child Tax Credit (CTC) has undergone significant changes in recent years, leaving many parents wondering what to expect in 2025. This article will clarify the current status of the CTC and address some common questions. Understanding the 2025 Child Tax Credit involves looking at both the temporary expansions and the return to pre-expansion rules.

The CTC Before and After the Expansion

Prior to the American Rescue Plan Act of 2021, the Child Tax Credit was a significantly smaller amount. It offered a maximum credit of $2,000 per qualifying child, with a phaseout for higher-income families.

The American Rescue Plan temporarily expanded the CTC, increasing the maximum credit to $3,600 per child under age 6 and $3,000 per child ages 6-17. It also made the credit fully refundable, meaning families could receive the full amount even if they owed no taxes. This expansion was only in effect for the 2021 and 2022 tax years.

What Happened After the Expansion?

The expanded CTC expired at the end of 2022. For the 2023 and beyond tax years, the CTC reverted to its pre-expansion form. This means:

• Maximum Credit: The maximum credit is $2,000 per qualifying child.
• Refundability: The credit is partially refundable. This means you may not receive the full $2,000 if you owe no income tax.
• Age Limits: The age limits remain the same; children must be under age 17 at the end of the year.
• Income Limits: The phaseout for higher-income families is also back in place. The specific income limits are adjusted annually for inflation.

The 2025 Child Tax Credit: What We Know

As of October 26, 2023, there have been no further legislative changes to the Child Tax Credit that will affect the 2025 tax year. Therefore, the 2025 Child Tax Credit will likely function under the same rules as 2023 and 2024: the pre-expansion rules. This means a maximum credit of $2,000 per qualifying child, with partial refundability and income limitations.

Key Considerations for 2025

• Income: Your adjusted gross income (AGI) will determine the amount of the credit you receive. If your income is too high, you may not qualify for the full credit or any credit at all.
• Filing Status: Your filing status (single, married filing jointly, etc.) will also impact your eligibility.
• Number of Qualifying Children: The more qualifying children you have, the higher your total CTC will be.
• Keep Records: Maintain accurate records of your children's Social Security numbers, birthdates, and other relevant information.

Where to Find More Information

For the most up-to-date and accurate information about the Child Tax Credit, consult the official IRS website. Tax laws can change, so always check the IRS website or consult a tax professional for the latest guidance.

Disclaimer: This article is for informational purposes only and should not be considered tax advice. Consult with a qualified tax professional for personalized guidance.