How the CTC Works Today

Taxpayers can claim a child tax credit (CTC) of up to $2,200 for each child under age 17 who is a U.S. citizen, national, or resident and has a Social Security number (SSN). The credit is reduced by 5 percent of adjusted gross income over $200,000 for single parents ($400,000 for married couples). If the credit exceeds income taxes owed, taxpayers can receive up to $1,700 per child of the balance as a refund, known as the additional child tax credit (ACTC) or refundable portion of the CTC. The ACTC is limited to 15 percent of earnings above $2,500 (figure 1).

Starting in 2026, the maximum credit will be indexed for inflation. The maximum ACTC, which was set at $1,400 in 2018, has been indexed for inflation since 2019 and for 2024 and 2025 equals $1,700 per child.

A child must be a U.S. citizen, national, or resident and have a Social Security number (SSN) to be eligible for the CTC. Taxpayers claiming the child must also have SSNs, although only one spouse in a married couple who files jointly must have an SSN. SSNs for taxpayers and children must be associated with work authorization. U.S. citizens, including children, receive such SSNs, as do noncitizens who are authorized to work on a permanent basis and their children (“green card holders"), refugees and asylees, and noncitizens allowed to work in the U.S. on a temporary basis (Kolker and Morton, 2023). The majority of SSNs issued to noncitizens are associated with work authorization so for simplicity they are often just referred to as SSNs. Taxpayers’ ineligible for SSNs—including undocumented immigrants— instead use individual taxpayer identification numbers (ITINs) when filing their tax return and will thus be ineligible for the CTC (unless their spouse and child have SSNs).

A nonrefundable $500 credit is available to dependents who are not eligible for the $2,200 CTC for children under 17. This credit is sometimes called the other dependent tax credit or ODTC (figure 1) or credit for other dependents, but unless otherwise specified, is assumed to be included in CTC statistics. Before 2018, these individuals would not have qualified for a tax credit but would have qualified for a dependent exemption, which was eliminated, first temporarily by the 2017 Tax Cuts and Jobs Act (TCJA) and later permanently by the One Big Beautiful Bill Act (OBBBA). Dependents eligible for this credit include children ages 17–18 or those 19–23 and in school full time in at least five months of the year. Also included are older dependents—representing about 6 percent of dependents eligible for the CTC.

Impact of the CTC

The Tax Policy Center estimates that slightly less than 90 percent of families with children received an average CTC of $2,520 in 2025. The average credit exceeds the maximum per child credit because families can have more than one child. Families with children in all income groups benefited from the CTC, but families in the lowest income quintile were least likely to benefit because fewer of them have sufficient earnings to qualify for the credit. Just under three-quarters of families in the lowest income quintile were eligible for a CTC, receiving an average credit of $1,610. The average credit was the smallest for this quintile because low-income families are most likely to be limited to the refundable portion of the credit, which was capped at $1,700 in 2025 rather than the full $2,200 limit for the nonrefundable credit (figure 2).

The percentage of families with children receiving the credit and the average credit received were the highest among moderate- and middle-income families. The share of families with children claiming a CTC was 93 percent in the second income quintile, 98 percent in third quintile, and 99 percent in the fourth quintile. The proportion of families with children receiving a credit then drops to 78 percent in the highest income quintile because the credit phases out at high incomes (figure 3).

The CTC improves the well-being of low-income families with children. The Census Bureau estimates that along with the EITC, the refundable portion of the CTC—the ACTC—lifted 6.4 million people out of poverty in 2023, including 2 million children. Researchers at Columbia estimated that in 2023, the CTC reduced child poverty by 17.1 percent (from a child poverty rate of 16.5 percent without any CTC to 13.7 percent).

Recent History of the CTC

The One Big Beautiful Bill Act (OBBBA) made the Tax Cuts and Jobs Act (TCJA) changes permanent, increased the maximum CTC amount from $2,000 per child to $2,200 per child beginning in 2025, and adjusted the maximum credit for inflation beginning in 2026. In addition to making the SSN requirement for children originally enacted under the TCJA permanent, the law also requires that taxpayers claiming the credit have SSNs. Among married joint filers, at least one parent must have an SSN. 

The American Rescue Plan Act (ARPA) increased the Child Tax Credit (CTC) for 2021. Tax filers could claim a CTC of up to $3,600 per child under age 6 and up to $3,000 per child ages 6 to 17. There was no cap on the total credit amount that a filer with multiple children could claim. The credit was fully refundable – low-income families could qualify for the maximum credit regardless of how little they earned or how much they owed in income taxes.

As under prior law, children who were US citizens, nationals, or residents and had SSNs were eligible for these benefits. The credit phased out in two steps. First, the credit began to decrease at $112,500 of income for single parents ($150,000 for married couples), declining in value at a rate 5 percent of adjusted gross income over that threshold until it reached pre-2021 levels. Second, the credit’s value was further reduced by 5 percent of adjusted gross income over $200,000 for single parents ($400,000 for married couples) (figure 1, blue lines). 

Prior to the ARPA, the CTC was temporarily changed by the TCJA. Effective beginning in 2018, the TCJA doubled the maximum CTC for children under 17 from $1,000 per child to $2,000 per child. The legislation specified in 2018 that up to $1,400 of the credit could be received as a refundable credit, the Additional Child Tax Credit (ACTC). The maximum refundable amount was indexed for inflation.

Under prior law, a child had to be a U.S. citizen, national, or resident to be claimed. The TCJA added an additional requirement that the child also have an SSN, preventing families with noncitizen children who had individual taxpayer identification numbers (ITINs) from claiming the credit. The law also allowed dependents who do not qualify for the $2,000 credit to qualify for a nonrefundable credit worth up to $500 per dependent. This credit is often referred to as the other dependent tax credit or ODTC. The law’s changes to the credit were temporary and originally scheduled to expire after 2025. The OBBBA made these changes permanent as well as making further changes to the credit beginning in 2025.

From 2003 to 2017, the maximum credit was $1,000 per child under 17. This reflected a gradual increase from $400 the first year it was in effect (1998) to $500 (1999, 2000) and subsequent increases under the first Bush-era tax cut (the Economic Growth and Tax Relief Reconciliation Act or EGTRRA) to $600 (2001, 2002), accelerated by a subsequent Bush-era tax cut law (the Jobs Growth and Tax Relief Reconciliation Act or JGTRRA) to $1,000 (2003-2010). These Bush-era tax cut changes were temporary and originally scheduled to expire at the end of 2010, but were extended temporarily and then made permanent by the American Taxpayer Relief Act ATRA. From enactment through 2017, the credit phased out by 5 percent of AGI over $75,000 for single and head of household filers and $110,000 for married joint filers. 

For low-income families, the refundable portion of the credit has also expanded over this time period. Before 2001, the CTC was generally nonrefundable. EGTRRA made part of the credit refundable based on earnings beginning in 2001 with the refundable portion (i.e., the ACTC) available to low-income families with earnings over $10,000 (this amount was indexed for inflation). As a result of changes made in response to the Great Recession, this threshold was temporarily reduced to $8,500 for 2008. The American Recovery and Reinvestment Act (ARRA) further reduced this threshold to $3,000 for 2009 and 2010. Along with the Bush-era tax cut changes discussed above, the $3,000 threshold was also extended temporarily after 2010 and ultimately made permanent by Protecting Americans from Tax Hikes (PATH) Act.

The refundable portion of the CTC under EGTRRA was originally designed in 2001 to coordinate with the earned income tax credit (EITC). Once earnings reached $10,020 for families with two children in 2001, there was no further increase in the EITC. The earnings threshold for the refundable CTC was set at $10,000 so families could now receive a subsidy for earnings in excess of that amount. Like the earning threshold amounts for the EITC, the $10,000 earnings threshold was indexed for inflation. When the earnings threshold for the refundable CTC was reduced—first to $8,500 in 2008 and then to $3,000 beginning in 2009—that link between the phase-in of the refundable CTC and the EITC was broken.

Updated August 2025