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Short Answer

The Child Tax Credit is $2,200 per qualifying child starting with tax year 2025 under the One Big Beautiful Bill Act, which made the amount permanent. The credit phases out at $200,000 AGI for single filers and $400,000 for married filing jointly. The refundable portion (Additional Child Tax Credit) is 15% of earned income above $2,500, up to the remaining unused credit. Returns claiming the ACTC are held by the IRS until after February 15 under the PATH Act.

Key Takeaways
  • The OBBBA increased the CTC from $2,000 (TCJA) to $2,200 per qualifying child, starting with TY 2025 (permanent, indexed for inflation after 2025).
  • Phase-out: $200,000 AGI single/HOH/MFS; $400,000 AGI MFJ. Reduction: $50 per $1,000 over threshold.
  • The ACTC (refundable portion) equals 15% of earned income above $2,500, capped at unused CTC.
  • Qualifying child must be under age 17 at year-end with a valid Social Security number.
  • ACTC filers face a PATH Act hold: the IRS cannot release refunds before February 15.
  • If you also pay for daycare or after-school care, the CTC stacks with the Child Care Tax Benefit Calculator and the new $7,500 Dependent Care FSA limit under OBBBA. See the Dependent Care FSA vs Credit Guide for the stacking strategy.
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Written by: Munib Ur Rehman  |  Reviewed by: Nausheen Shahid (LMN Tax Inc.)  |  Tax Year 2025  |  Last Reviewed: March 2026

What Did the OBBBA Change About the Child Tax Credit?

The One Big Beautiful Bill Act (Pub. L. 119-21, signed July 4, 2025) increased the maximum Child Tax Credit from $2,000 to $2,200 per qualifying child. This change is permanent, beginning with tax year 2025.

The CTC was originally $400 per child, then $1,000, then raised to $2,000 by the Tax Cuts and Jobs Act of 2017. The TCJA increase was set to expire after 2025. The OBBBA extended and increased it to $2,200.

For tax year 2025, the increase is $200 per qualifying child compared to the prior $2,000 limit. A family with two qualifying children gains $400 in additional credit under the OBBBA. A family with three children gains $600.

The credit is governed by IRC §24. The phase-out structure ($200,000 / $400,000 thresholds, $50 per $1,000 reduction) was retained from the TCJA framework.

CTC Comparison: TCJA (2024) vs. OBBBA (2025 onward)
ItemTCJA (TY 2024)OBBBA (TY 2025 onward)
Maximum CTC per child$2,000$2,200
Max ACTC per child$1,700 (TY 2024)Up to $1,700 per child
Phase-out: single/HOH$200,000 AGI$200,000 AGI (unchanged)
Phase-out: MFJ$400,000 AGI$400,000 AGI (unchanged)
Phase-out rate$50 per $1,000$50 per $1,000 (unchanged)
ACTC formula15% of earned income above $2,50015% of earned income above $2,500
Qualifying child ageUnder 17Under 17 (unchanged)
SSN requiredYesYes (unchanged)
SunsetDecember 31, 2025 (pre-OBBBA)None (permanent; indexed for inflation after 2025)

Who Is a Qualifying Child for the CTC?

The qualifying child tests are defined in IRC §24 and IRC §152. A child must meet all of the following to count for the Child Tax Credit:

  • Age: Under age 17 at the end of the tax year. A child who turns 17 during 2025 does not qualify for the 2025 CTC.
  • Relationship: Your child, stepchild, foster child placed by an authorized agency, sibling, step-sibling, half-sibling, or a descendant of any of these (e.g., grandchild, niece, nephew).
  • Residency: Lived with you for more than half of the tax year. Temporary absences for school, medical care, or detention count as living with you.
  • Support: Did not provide more than half of their own financial support during the year.
  • Dependent: Claimed as your dependent on your return. You cannot claim a child as a dependent if someone else already claimed them.
  • Citizenship: U.S. citizen, U.S. national, or U.S. resident alien.
  • Social Security number: Must have a valid SSN issued by the Social Security Administration before the due date of the return (including extensions). An ITIN is not sufficient for the CTC.

For tax year 2025, a child born January 1, 2025 through December 31, 2025 is under age 17 at year-end and meets the age test. A child born in 2025 may also qualify for the $1,000 Trump Account federal seed, which is a separate OBBBA benefit.

How the Phase-Out Works

The CTC is reduced for higher-income taxpayers. The phase-out is calculated based on your modified adjusted gross income (MAGI), which for most taxpayers equals AGI from line 11 of Form 1040.

The phase-out begins at:

  • $200,000 MAGI for single filers, heads of household, and married filing separately
  • $400,000 MAGI for married filing jointly

For each $1,000 (or fraction thereof) of MAGI above the applicable threshold, the credit is reduced by $50. The credit cannot be reduced below zero.

Example: A single filer with $215,000 AGI and one qualifying child. AGI excess: $215,000 minus $200,000 = $15,000. Number of $1,000 increments: 15. Phase-out: 15 × $50 = $750. Net CTC: $2,200 minus $750 = $1,450.

The credit is fully eliminated for single filers at approximately $244,000 AGI with one child ($2,200 ÷ $50 = 44 increments × $1,000 = $44,000 above threshold). With two children, elimination occurs at approximately $288,000 AGI.

How the Additional Child Tax Credit (ACTC) Works

The ACTC is the refundable portion of the Child Tax Credit. It matters most to lower-income families whose CTC exceeds their income tax liability.

The ACTC equals the lesser of:

  1. The amount of the CTC that exceeds your federal income tax liability (the unused credit)
  2. 15% of your earned income above $2,500

For tax year 2025, "earned income" for ACTC purposes includes wages, salaries, tips, and net self-employment income.

Example: A single parent with one child. Net CTC: $2,200. Federal income tax before credits: $800. Non-refundable CTC applied: $800 (reduces tax to $0). Unused CTC: $1,400. Earned income: $38,000. ACTC formula: 15% × ($38,000 − $2,500) = 15% × $35,500 = $5,325. ACTC (capped at lesser of unused CTC $1,400 and $1,700 cap): $1,400. Total CTC benefit: $800 (non-refundable) + $1,400 (refundable) = $2,200.

Married filing separately filers can claim the ACTC on the same terms if they otherwise qualify.

Alternative ACTC for Taxpayers with 3+ Children: Taxpayers with three or more qualifying children may use an alternative ACTC calculation based on the amount by which their combined Social Security and Medicare taxes (or SECA taxes for self-employed) exceed their Earned Income Credit. This alternative often produces a higher refundable amount. Schedule 8812 calculates both methods and applies the more favorable result. This guide focuses on the standard 15% formula.

PATH Act: Why ACTC Refunds Are Delayed

The Protecting Americans from Tax Hikes (PATH) Act requires the IRS to hold all refunds that include the Additional Child Tax Credit until after February 15 each year.

This rule applies regardless of when you file your return. Filing in January does not move your refund earlier if your return includes the ACTC.

Most ACTC refunds are released within 2 to 3 weeks after February 15. If you file after February 15, the PATH Act hold does not apply, and the standard processing window of 10 to 21 days applies to e-filed returns.

PATH Act applies to ACTC only, not to the non-refundable CTC. If your CTC is fully absorbed by your income tax liability and you have no ACTC, the PATH Act hold does not apply to your refund. The hold is triggered by the presence of a refundable ACTC amount on your return.

To estimate when your ACTC refund may arrive, use the Refund Date Estimator and select the "Includes EITC or Additional Child Tax Credit" return type for an accurate timeline projection.

How the CTC Interacts with Other OBBBA Provisions

The Child Tax Credit is one of several family-focused provisions in the OBBBA. Two others are closely related for parents of young children.

Trump Account (MAGA Account)

Children born after December 31, 2024 may be eligible for a Trump Account: a new savings vehicle created by the OBBBA that provides a $1,000 federal seed contribution and allows up to $5,000 in annual after-tax contributions. The Trump Account is a long-term savings tool invested in U.S. equity index funds, with distributions available beginning at age 18.

The CTC and a Trump Account operate independently. A parent may claim the CTC for the same child who has a Trump Account. Contributing to a Trump Account does not reduce your CTC, and the CTC does not affect the Trump Account's $1,000 federal seed or contribution limit. Use the Trump Account Calculator to project account growth to age 18.

Other OBBBA Deductions

The OBBBA also created below-the-line Schedule 1-A deductions for tips (IRC §224), overtime (IRC §225), and auto loan interest (IRC §163(h)(4)), and expanded the SALT cap from $10,000 to $40,000 for itemizers. These deductions reduce your taxable income, not your AGI, which may reduce your income tax liability. A lower tax liability means more of your CTC may become refundable as ACTC rather than being absorbed by tax liability. They are calculated separately from the CTC.

Confirmed vs. Pending Guidance

The core CTC rules are set in statute. A small number of implementation details are still pending IRS guidance.

Confirmed by Statute
Credit amount$2,200 per qualifying child, TY 2025 onward Confirmed
Phase-out thresholds$200,000 single/HOH · $400,000 MFJ (same as TCJA) Confirmed
Phase-out rate$50 per $1,000 over threshold Confirmed
ACTC formula15% of earned income above $2,500, up to unused CTC, refundable Confirmed
PATH Act delayACTC refunds held until after February 15 Confirmed
Schedule 8812Required to claim CTC and ACTC Confirmed
SunsetNone. Permanent, indexed for inflation after 2025 Confirmed
Pending IRS guidance: The IRS states the 2025 refundable portion (Additional Child Tax Credit) is up to $1,700 per qualifying child, and the ACTC formula (15% of earned income above $2,500) is confirmed. IRS has not issued a separate OBBBA-specific publication for CTC rules. Current guidance applies IRC §24 as amended. Provisional

Who Benefits Most

Likely Benefits Most
Families with 2–3 qualifying children under 17, AGI under phase-out thresholdsFull $2,200 per child. Entire credit available with no reduction.
Families with earned income above $2,500 who owe little or no income taxACTC is refundable. Low or zero income tax means more of the credit becomes a cash refund.
Families with a child born in 2025CTC applies in the first tax year. Trump Account $1,000 federal seed also available, both apply independently.
Gets Little or No Benefit
Families with AGI above $400,000 MFJPhase-out eliminates the credit entirely at high income levels.
Families with no earned incomeACTC not available. Non-refundable CTC still applies if there is income tax liability.
Families with all children age 17 or older at year-endAge-17 cutoff disqualifies older children. A $500 Other Dependent Credit may still apply.

Practitioner Insight (LMN Tax Inc.)

LMN Tax Inc., Client Pattern

In practice, many clients with young children do not realize the $200 per child OBBBA increase flows through to the ACTC for lower-income families. For a family with two children and modest income, the additional $400 in CTC often converts entirely to a larger ACTC refund rather than reducing a tax bill that was already near zero. The PATH Act hold matters here: these families count on mid-February refunds for rent or bills. Setting the right expectation about the February 15 hold date is often the most practical thing we can communicate at intake.

Real-World Scenario

Family profile: Married filing jointly. Two qualifying children, ages 5 and 8. AGI: $110,000. Tax liability before credits: $8,400.

Pre-OBBBA (TY 2024): CTC = $2,000 × 2 children = $4,000 total. No phase-out (AGI below $400,000 MFJ threshold). Credit reduces tax liability from $8,400 to $4,400.

OBBBA (TY 2025 onward): CTC = $2,200 × 2 children = $4,400 total. Phase-out still does not apply. Credit reduces tax liability from $8,400 to $4,000. Net improvement: $400 in additional savings compared to prior law.

ACTC implication: This family has sufficient tax liability to absorb the full credit as a non-refundable offset. For a family with lower tax liability, say $2,000, the OBBBA increase adds $400 more credit, a larger portion of which becomes refundable ACTC (up to 15% of earned income above $2,500, capped at $1,700 per child for TY 2025).

Scenario 1: MFJ, 3 Children, $65,000 Earned Income
CTC before phase-out (3 × $2,200)$6,600
Estimated income tax liability$3,200
Non-refundable CTC applied$3,200 (reduces tax to $0)
Unused CTC$3,400
ACTC: 15% × ($65,000 − $2,500)$9,375, capped at unused CTC of $3,400
ACTC refund$3,400
Total CTC benefit$6,600 ($3,200 tax reduction + $3,400 refund)
Scenario 2: MFJ, 2 Children, $380,000 AGI
CTC before phase-out (2 × $2,200)$4,400
Phase-out threshold (MFJ)$400,000
AGI above threshold$0 (AGI is below threshold)
Phase-out reduction$0
CTC available$4,400 (full credit)
NoteMFJ earners up to $399,999 AGI receive the full credit. Phase-out only begins at $400,000.

When These Rules May Not Apply

  • Child turns 17 in the tax year: The age cutoff is under 17 at December 31 of the tax year. A child who was 16 for most of 2025 but turns 17 before December 31 does not qualify.
  • No valid SSN: A child with an Individual Taxpayer Identification Number (ITIN) instead of an SSN does not qualify for the CTC or ACTC. An ITIN is not a valid SSN for this purpose.
  • Married filing separately: MFS filers can claim the CTC and, if they meet the earned-income rule, the refundable ACTC. The phase-out starts at $200,000.
  • Divorced or separated parents: The CTC goes to the custodial parent (the one with whom the child lived for more than half the year) unless the custodial parent releases the exemption to the non-custodial parent on Form 8332. The ACTC cannot be transferred to the non-custodial parent even with Form 8332.
  • Child provided more than half their own support: A child who worked and provided more than half of their own support fails the support test. This is rare for children under 17 but can occur.
  • State CTC conformity: Many states have not conformed to the OBBBA increase. Your state child tax credit, if any, may be based on the prior $2,000 federal amount or a separate state formula.
  • No 2028 sunset: The OBBBA made the $2,200 credit permanent and indexes it for inflation after 2025, so it does not revert after 2028.

Frequently Asked Questions

What is the Child Tax Credit for 2025 under the OBBBA?
The CTC is $2,200 per qualifying child for tax year 2025. The increase is permanent, and the amount is indexed for inflation after 2025.
What is the ACTC and who gets it?
The Additional Child Tax Credit (ACTC) is the refundable portion of the CTC. Taxpayers whose CTC exceeds their income tax liability may receive up to 15% of earned income above $2,500 as a cash refund, capped at the unused credit amount. Married filing separately filers can claim it if they otherwise qualify.
Does the PATH Act affect everyone who claims the CTC?
No. The PATH Act hold applies only to returns that include a refundable ACTC amount. If your entire CTC is absorbed by your income tax liability and there is no ACTC, the PATH Act does not delay your refund. The hold is triggered by the presence of an ACTC on your return.
Can I claim the CTC and the Trump Account for the same child?
Yes. The CTC and a Trump Account are independent OBBBA provisions. The CTC reduces your current-year income tax and may generate a refund. The Trump Account is a long-term savings vehicle with a $1,000 federal seed for children born from January 1, 2025 through December 31, 2028. Both can apply to the same qualifying child.
What form do I use to claim the CTC and ACTC?
Schedule 8812 (Credits for Qualifying Children and Other Dependents) is attached to Form 1040. The non-refundable CTC flows to Form 1040 line 19. The refundable ACTC flows to Form 1040 line 28. Most tax software calculates both automatically when you enter your dependents.
Does the OBBBA CTC apply retroactively to 2024?
No. The OBBBA was signed on July 4, 2025 and the CTC changes are effective beginning with tax year 2025. For tax year 2024 (filed in 2025), the prior $2,000 TCJA limit applies with a maximum ACTC of $1,700 per child.
Do OBBBA income deductions (tips, overtime, SALT) affect how much CTC I can claim?
Indirectly. The No Tax on Tips, No Tax on Overtime, Auto Loan Interest, and SALT deductions reduce your taxable income, not your AGI, which lowers your income tax liability before credits. A lower tax liability means more of your CTC may flow through as refundable ACTC rather than being absorbed by the tax bill. The CTC itself is not changed by these deductions, but the split between non-refundable and refundable portions can shift.
Does the OBBBA Child Tax Credit expire?
No. The One Big Beautiful Bill Act made the $2,200 credit permanent: IRC §24(h) no longer has an end date, and the $2,200 amount is indexed for inflation for tax years after 2025. Before the Act, the credit was scheduled to fall to $1,000 per child after 2025; that sunset was removed.

Correction · October 2026. An earlier version of this page said the $2,200 child tax credit applies only for 2025 through 2028 and reverts to $1,000 per child after 2028. That was incorrect: the One Big Beautiful Bill Act made the $2,200 amount permanent (IRC §24(h) has no end date), and it is indexed for inflation for tax years after 2025. The page also said married-filing-separately filers cannot claim the refundable additional child tax credit; the Schedule 8812 rules contain no such bar. See our Corrections Policy and Log.

Sources

Related Tools and Guides

CTC Tools

Child Tax Credit Calculator Refund Date Estimator Federal Refund Tracker

OBBBA Family Provisions

Adoption Tax Credit Guide Adoption Tax Credit Calculator Trump Account Guide Trump Account Calculator Kiddie Tax Guide SALT Deduction Increase Guide

OBBBA Income Deductions

No Tax on Tips Guide No Tax on Overtime Guide Auto Loan Interest Guide

More Guides

Self-Employment Tax Guide IRS Refund Timeline All Guides All Calculators

What To Do Next

Next Step

Use the Child Tax Credit Calculator to estimate your CTC, phase-out reduction, and refundable ACTC for tax year 2025. Enter your filing status, AGI, number of qualifying children, earned income, and estimated tax before credits to get a full breakdown.

If your return will include the ACTC, use the Refund Date Estimator to estimate when your IRS deposit will arrive. Select the ACTC return type in that calculator to account for the PATH Act hold.

If you have children born from January 1, 2025 through December 31, 2028, review the Trump Account Guide to understand the $1,000 federal seed and $5,000 annual contribution limit that apply to those same children independently of the CTC.

The CTC increase is one of several OBBBA provisions that start in TY 2025. If you also have tip income, overtime pay, or a new car loan, additional deductions may apply on the same return. See the OBBBA Tax Changes Guide for a complete comparison of all six provisions and how to coordinate them at filing.

Disclaimer: This guide is for educational purposes only and does not constitute tax or legal advice. CTC eligibility depends on individual circumstances including qualifying child tests under IRC §24 and §152. The OBBBA child tax credit changes apply from TY 2025 and are permanent. Consult a qualified tax professional for advice specific to your situation.