The Additional Child Tax Credit (ACTC) for 2025 is a valuable tool for families with children, offering a tax refund that can alleviate financial pressures. Below, we explore the amounts, requirements, and everything necessary to apply, based on the information available through March 2025.
The ACTC is the refundable portion of the Child Tax Credit (CTC), which in 2025 allows you to claim up to $2,000 per 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 what you owe, up to a maximum of $1,700 per 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 refundable portion of the CTC of $2,000, adjusted for income limits and specific calculations. Research suggests this amount remains the same as in 2024, according to IRS Inflation Adjustments for Tax Year 2025 updates.
However, we always recommend checking any legislative changes, as no significant amendments have been proposed for 2025 to date, but they are not completely ruled out yet.
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 file it with your Form 1040. This schedule helps calculate the credit and determine the refundable amount. Evidence suggests that most tax software, such as TurboTax, guides users through this process with interview questions, simplifying completion (TurboTax on ACTC). If your income is below certain thresholds, you may qualify for free software through the IRS Free File program.
Please note that the IRS cannot issue refunds before mid-February of the following year for returns claiming ACTC. For tax year 2025, this means refunds could be delayed until mid-February 2026, which may impact your financial planning.