Raising kids is costly, but the federal tax code offers powerful relief through the 2025 child tax credit and the child and dependent care tax credit. These credits can lower your tax bill or even increase your refund if you meet the IRS rules. This article explains eligibility, income limits, and how to calculate each credit so you can maximize your family’s tax savings this year.

If you qualify, you can get both credits in the same year.

In This Article

What Is the 2025 Child Tax Credit and Who Qualifies?

The child tax credit is only available if you have what the IRS calls a “qualifying child.” A qualifying child is a child who qualifies as a dependent for tax purposes. A qualifying child can be your son, daughter, stepchild, adopted child, foster child, brother, sister, stepbrother, stepsister, or a descendant of any of them (for example, your grandchild, niece, or nephew).

A qualifying child must:

  • live with you for over half the year
  • provide less than half of their own support
  • be claimed as a dependent on your return.
  • not file a joint return for the year (or filed the joint return only to claim a refund of taxes withheld or estimated taxes).
  • be a U.S. citizen, resident, or national, and
  • have a Social Security number which you must provide on your tax return.

The child tax credit may be claimed if you have a qualifying child under age 17 at the end of the year. You get no credit if a child turned 17 during the year.

The IRS has an online questionnaire you can complete to determine if you have a qualifying child. Visit the Does My Child/Dependent Qualify for the Child Tax Credit? page at the IRS website.

Before you get too excited about how much money your child is going to save you on your taxes, read on. The child tax credit is subject to an income threshold and the amount of credit you can take each year goes down as your income approaches that threshold amount.

2025 Child Tax Credit Amounts, Income Limits, and Phaseouts

For tax year 2025, the child tax credit is $2,200 per qualifying child. (The amount remains $2,200 for tax year 2026, which is the return you file in 2027.) This credit is gradually phased out for taxpayers whose incomes rise up to and above the annual threshold amount specified for the year. Specifically, for each $1,000 that your modified adjusted gross income exceeds the income threshold level, the total child tax credit for a family (not the amount per child) is reduced by $50. If you make too much money, you won’t get any credit at all. However, only a small fraction of all taxpayers are unable to obtain the credit.

The child tax credit starts to be reduced only when your adjusted gross income reaches the following levels:

  • $400,000 for married couples filing jointly, and
  • $200,000 for all other taxpayers.

The child tax credit is partly refundable (that is, you may collect it even if you owe no taxes for the year). The "additional child tax credit" is the refundable portion of the child tax credit.

The maximum refundable amount is $1,700 per child (2025). But the actual refundable amount you can collect if you owe no tax for the year depends on your earned income (generally, wages, salary, tips, or net earnings from self-employment). The refundable amount is equal to 15% of your earned income over $2,500, up to the maximum $1,700 credit. For example, if your earned income is $10,000, your refundable credit would be 15% x ($10,000 - $2,500) = $1,125.

If you have three or more qualifying children and receive the earned income credit, you can use a different formula to figure your refundable credit. With this formula, your refundable credit is equal to the amount your Social Security taxes exceed your earned income credit. You should use this formula if it will result in a larger credit.

The Tax Cuts and Jobs Act also established a new $500 nonrefundable child care credit for dependents who are not qualifying children (also called the “family care credit”). For example, you may claim this credit for parents or grandparents if they are your dependents for tax purposes. Because this credit is nonrefundable, you may benefit from it only if you owe income taxes for the year. The One Big Beautiful Bill Act made this credit permanent.

When Will I Get My Tax Refund?

If you claim the additional child tax credit, you probably won't get your refund until around March 2, 2026, assuming everything is correct and you use direct deposit. You can check Where's My Refund for a personalized refund date.

How the 2025 Child and Dependent Care Tax Credit Works

Unlike the child tax credit (which you get simply by having a qualifying child), you can use the child and dependent care credit only if you spend money for child care so that you and your spouse, if any, can work or look for work. This credit is nonrefundable. There is no income ceiling on the child and dependent care credit (which is also different from the child tax credit). People with higher incomes get a smaller credit than those with more modest incomes. Here’s how it works.

You qualify for the credit if:

  • you have a qualifying child or other dependent under the age of 13, or your spouse is disabled and physically or mentally incapable of caring for themself, or you have any disabled dependent who has income of less than $5,200 per year
  • you incur child care expenses to enable you and your spouse, if any, to earn income
  • you and your spouse file a joint tax return (applicable only if you’re married), and
  • you and your spouse, if any, both work either full or part-time and have earned income for the year, unless you or your spouse is a full-time student or disabled. (Looking for work counts as being employed.)

The amount of the credit is based on a percentage of the child care expenses you incur on the days that you and/or your spouse work. You can claim 20% to 35% of childcare expenses up to $3,000 for one child, or $6,000 for two or more. But the credit is reduced by 1% for every $2,000 in household income over $15,000, until reaching 20%.

If you’re fortunate enough to have an employer that reimburses you for child care expenses, you must deduct the reimbursed amount from your annual child care expenses.

Obviously, you need to keep track of everything you spend on child care during the year and be sure to keep receipts and canceled checks. Child care expenses include expenses both in and outside your home, such as:

  • babysitting
  • daycare
  • nursery school, and
  • day camp (but not if the child sleeps overnight at the camp).

If your child turns 13 during the year, you can only include those expenses you incur before that child 13th birthday.

To claim the credit, you’ll have to list on your tax return the name, address, and Social Security number or Employer Identification number of the people you pay for dependent care, so be sure to get this information. You must also file IRS Form 2441, Child and Dependent Care Expenses with your tax return.

The IRS has an online questionnaire you can complete to determine if you qualify for the child and dependent care credit. Visit the Am I Eligible to Claim the Child and Dependent Care Credit? page at the IRS website.

Getting Tax Help

Hiring the right tax professional is important because getting good tax help can translate into more money in your pocket. To learn more about tax credits (and deductions), talk to a tax lawyer or other tax adviser.