The Additional Child Tax Credit (ACTC) for 2025 is an important tool for families with children, providing a tax refund that can help relieve financial stress. Based on the information available through March 2025, we will go over the amounts, requirements, and everything else you need to apply.
The ACTC is the refundable portion of the Child Tax Credit (CTC), and in 2025, you can claim up to $2,000 for each qualifying child. While the CTC is non-refundable and only reduces your tax debt to zero, the ACTC allows you to receive a refund if your CTC exceeds your owed amount, up to a maximum of $1,700 for each child.
The ACTC amounts for 2025: Claim your cash
For tax year 2025, the maximum ACTC amount is $1,700 per qualifying child. This amount is based on the $2,000 refundable portion of the CTC, which has been adjusted for income limits and specific calculations. According to the IRS Inflation Adjustments for Tax Year 2025 updates, this amount is expected to remain unchanged from 2024.
However, we always recommend checking any legislative changes, as no significant amendments have been proposed for 2025 as of yet, but they are not completely ruled out.
The ACTC calculation depends on three factors, and the final amount is the lower of:
- The excess of the CTC over your tax debt after other deductions.
- 15% of your earned income that exceeds $2,500.
- $1,700 for each qualifying child.
For example, if your CTC is $2,000, you owe $500 in taxes, and your earned income is $10,000, the ACTC would be the lesser of ($2,000 – $500 = $1,500), 15% of ($10,000 – $2,500 = $1,125), or $1,700, resulting in $1,125.
Eligibility Requirements
To qualify for the ACTC, you must first meet the CTC requirements:
Age and Relationship: Your child must be under age 17 at the end of the tax year and be your son, stepdaughter, eligible adopted child, brother, sister, stepbrother, step-sister, half-brother, half-sister, or a descendant thereof (for example, grandchild, nephew, niece).
Residence and Dependency: Must live with you more than half the year and be claimed as a dependent on your return. You should not file a joint return (unless you are just claiming a refund).
SSN and Support: You must have a valid Social Security Number (SSN) for employment, issued before the due date of your return (including extensions), and must not provide more than half of your own support.
Earned Income: For the ACTC, you need earned income of more than $2,500. Earned income includes wages, tips, and self-employment income, but not interest, dividends, or other passive income.
Income Limits: Your modified adjusted gross income (MAGI) must be less than $200,000 if you are single or $400,000 if you file jointly. If you exceed these limits, the CTC is reduced by $50 for every $1,000 over the threshold, which may affect the ACTC.
Claim process to access your ACTC money
To claim the ACTC, you must complete Schedule 8812 and submit it along with your Form 1040. This schedule assists in calculating the credit and determining the refundable amount.
According to evidence, most tax software, such as TurboTax, walks users through this process with interview questions, making it easier to complete.
If your income falls below certain thresholds, you may be eligible for free software through the IRS Free File program.
Please keep in mind that the IRS cannot issue refunds for ACTC-claiming returns until mid-February of the following year. For the fiscal year 2025, this means that refunds may be delayed until mid-February 2026, which may affect your financial planning.