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Additional Child Tax Credit 2025 is one such credit that is a refundable portion of the Child Tax Credit claimed by US citizens who have an eligible child.
The ACTC is a refundable credit that would increase your tax refund when you qualify for the credit. Many taxpayers claim this credit when they list a child as a dependent on their tax return. So, as the 2025 tax season approaches, taxpayers should be aware of the ACTC.
Additional tax credit for children in 2025
Additional Child Tax Credit or CTC refunds are offered to families with dependent children to help reduce their financial pressure. The ACTC portion is the unused portion of the CTC that corresponds to the rising cost of living.
CTC recipients get this credit when they can’t get the full credit, so it’s a big help for taxpayers. With this loan, the state supports parents or guardians with the rising costs of raising a child because the costs of child care, education costs and others are rising.
The 2025 tax season is just a few months away, so taxpayers should prepare well for their tax refunds and consider such credits so they can get a boost in their tax refunds. An ACTC payment is also processed with a tax refund, just like the EITC.
Who is eligible for additional child tax credit in 2025?
According to IRS rules, ACTC/CTC are credits for individuals who have a dependent child who meets the eligibility requirements below:
age:
- The age of the child must be under 17 years by the end of the tax year 2024;
Relationship:
- The child may be your son, stepson, daughter, brother, sister, half-brother/sister, eligible foster child, half-sister/brother or a descendant of your family, such as a grandchild, nephew or niece,
Living situation:
- The child must live with you and you are primarily responsible for the child for more than half of the tax year (2024).
Application status:
- The child must be listed as a dependent on your tax return, just not on someone else’s return;
- The child may not submit a joint application with the spouse (if any)
Citizenship and other:
- Child must be a US citizen/citizen/qualifying alien category;
- The child must have a valid SSN (Social Security Number) that was issued before the last date of the 2024 tax year, which is April 15, 2025.
- The child may not pay child support, even half child support, for themselves in the 2024 tax year.
Exceptions:
- A taxpayer cannot claim the ACTC when the taxpayer or the taxpayer’s spouse filed Form 2555 (Foreign Earned Income) or Form 2555EZ.
How much can you get in additional child tax credit for 2025?
Under IRS rules for tax year 2024, the child tax credit for qualified taxpayers is $2,000 for each qualifying child, which is the nonrefundable portion, while, under the refundable portion, taxpayers can receive a credit of up to $1,700 per qualifying child .
The Tax Cuts and Jobs Act increased the CTC amount to $2,000 from $1,000 and set a limit on the refundable portion. Last year, the ACTC was $1,600 for each qualifying child, which has increased this year.
A tax credit like the ACTC becomes a tax refund when the amount of the credit is greater than the tax you owe the agency, for example, if your tax bill is $5,000 and the tax credit is $5,500, you will get a refund of $5,500 – $5,000 = $500.
How does your income affect your ACTC credits?
Adjusted gross income affects a taxpayer’s ACTC/CTC credit just like other credits, so taxpayers need to get a clear idea of the income threshold for such credits. According to IRS rules, the CTC/ACTC would be reduced if the income limit exceeds the following limit:
- For individual filers, ACTC/CTC income should not exceed the $200,000 limit, otherwise it will be reduced;
- For married filing jointly, ACTC/CTC income should not exceed the $400,000 limit
Last time the phase-out limit for ACTC/CTC was $75,000 for individuals and $110,000 for married but filing jointly, however, this year the IRS increased the limit to ensure more people can get the credits.
Therefore, the IRS has encouraged taxpayers to file their tax returns even if they have no income to report because they can get such credits as tax refunds from the agency.
How can you claim additional tax credit for children in 2025?
A taxpayer who meets the ACTC/CTC eligibility requirements and wishes to claim the credit can file their 2025 tax return before the last date of April 15, 2025 with Schedule 8812. Schedule 8812 with tax form is required because it is related to the qualifying child credits and other dependent family members.
The form has an ACTC section in Part II-A where you can enter all the details and claim credit for an eligible child. Taxpayers are advised to submit their claim online as it is much faster and more convenient. The IRS has many electronic methods, such as IRS Direct File or Free File, etc. which taxpayers can check and submit their tax returns.
ACTC filers can expect a slight delay in their tax refunds because under the PATH Act, the agency cannot process such credits before February 15 of the tax year. The restriction is to stop fraudulent activity in such loans, so in 2025 you can expect your ACTC refund after February 27, 2025 (direct deposit) or the first week of March 2025 (paper check).
The ACTC is a refundable credit that comes with your tax refund, so non-taxpayers who meet the ACTC eligibility requirement should file their tax return and receive this credit.
