The Updated Child Tax Credit (CTC) for 2025 Filers: What’s New?

A Complete Guide to the New $2,200 Credit, the $1,700 Refundable Portion, and How to Maximize Your Benefit

The Child Tax Credit (CTC) continues to be one of the most important tax benefits for American families, and major updates are arriving for the 2025 tax year (filed in early 2026). These changes increase the credit amount, expand the refundable portion, and introduce new requirements that all parents need to understand before filing their next return.

If you are a parent, guardian, or taxpayer caring for a dependent child, the updated rules can increase your refund and provide meaningful financial support. But the details matter. This guide breaks down everything you need to know to claim the full benefit.

What Is the New 2025 Child Tax Credit Amount?

For tax year 2025, the Child Tax Credit increases to:

• $2,200 per qualifying child
• Up to $1,700 of that credit is refundable (meaning you can receive it even if you owe no tax)

This marks a continued improvement over prior years and provides additional support to families with children under age 17.

The refundable portion is especially important because it is:

• Tied to inflation
• Expected to increase gradually depending on IRS cost-of-living adjustments
• Available even to lower-income households

For many families, this update will directly increase refund amounts for 2026.

How the Refundable $1,700 Portion Works

The refundable portion of the CTC is known as the Additional Child Tax Credit (ACTC). This part of the credit is paid out even if your tax liability is zero.

For 2025:

• The maximum refundable amount is $1,700 per qualifying child
• It may increase slightly year to year based on inflation adjustments
• It is available only if you meet all eligibility requirements

Refundable credits have a powerful impact because they go straight to your refund rather than simply offsetting tax owed.

Who Qualifies for the Updated Child Tax Credit?

To qualify for the full 2025 CTC, your child must:

• Be under age 17 at the end of 2025
• Be your dependent
• Live with you more than half the year
• Be a U.S. citizen or U.S. national
• Have a work-eligible Social Security Number
• Not provide more than half of their own financial support

This updated SSN requirement is critical. The IRS clarified that a child must have a work-eligible SSN, not an ITIN, in order to claim the credit.

Parents must also provide valid identification numbers and meet residency and support rules.

Income Limits for the 2025 Child Tax Credit

Just like previous years, the CTC begins to phase out for higher-income taxpayers.

Phase-out thresholds begin at:

• $200,000 for Single filers
• $400,000 for Married Filing Jointly

If your income exceeds these levels, your credit amount will be reduced by $50 for every $1,000 of income above the threshold.

Most middle-income families still qualify for the full credit.

How to Maximize the Refundable Amount of the CTC

The refundable portion of the Child Tax Credit is tied to your earned income and other eligibility rules. To receive the maximum refundable amount:

1. Confirm Your Child Has a Work-Eligible SSN

Children with ITINs do not qualify for the main CTC.
This is one of the most important updated requirements.

2. Ensure You Meet the Earned Income Rules

A portion of the refundable credit is calculated based on earned income above a specific threshold. Increasing earned income through wages or self-employment may increase your refundable credit.

3. Claim All Eligible Dependents

Each qualifying child under age 17 increases your total credit by $2,200.

4. Avoid Filing Errors

Mistakes with dependency claims, custody arrangements, or SSN mismatches can delay or reduce the credit.
Electronic filing reduces error rates significantly.

5. File Early and Keep Records

Documentation proving residency, support, and SSNs may be required if the IRS questions eligibility.

How the Updated CTC Will Impact Your 2026 Refund

The enhanced credit has a direct effect on refund amounts for qualifying taxpayers. Here is what families can expect:

• Higher total credit per child
• More refund potential because of the increased refundable portion
• Fewer limitations for lower-income households
• A more predictable credit amount due to annual inflation indexing

For families with multiple children, the refund increase can be significant.
For example, a family with three qualifying children could receive:

• $6,600 total CTC
• Up to $5,100 refundable

This level of support can make a substantial difference during the 2026 tax season.

Common Filing Situations to Consider

Shared Custody Situations

Only one parent can claim the child for CTC purposes, even if custody is split. Ensure Form 8332 is used properly if needed.

Newborns and Mid-Year Births

Children born anytime in 2025 qualify as long as they have a valid SSN.

Non-Custodial Parents

You may claim the CTC only if the custodial parent releases exemption rights following IRS rules.

Low-Income Workers

Even with low tax liability, you may still receive the refundable portion.

How to Claim the Updated CTC

To claim the credit on your 2025 tax return (filed in 2026):

1. Report your qualifying dependents with valid SSNs.
2. Complete the Child Tax Credit section of Form 1040.
3. Calculate earned income for the refundable portion.
4. Use IRS worksheets or updated tax software for accuracy.
5. File electronically with direct deposit for the fastest refund.

The IRS reviews Child Tax Credit claims closely each year, so accuracy is essential.

The updated $2,200 Child Tax Credit, including the $1,700 refundable portion, is a major benefit for families filing their 2025 taxes. By understanding the new SSN requirements, income rules, and earned-income thresholds, parents can maximize their credit and secure a larger refund in 2026.

With inflation indexing and enhanced refundable benefits, the CTC remains one of the most valuable tools available to working families.