If you live in the right state, you may be eligible for additional Child Tax Credits that increase the amount of money you receive for each dependent child, which can come in handy as a financial relief during tax season.
These credits, both state and federal, are designed to ease the financial burden on parents by offering a significant refund for each child declared a dependent. Although the temporary expansion of federal credit is scheduled to end in 2026, we can explore in the short term which CTCs are still in effect and to which you could apply.
Tax credits as a financial relief in the United States
The impact of Child Tax Credits is, without a doubt, one of the most valued by American families with children who have to face living costs such as food, health, education, and housing.
Recent research shows that the federal credit expansion in 2021 led to a dramatic reduction in child poverty in the country. A report from the Center on Poverty and Social Policy at Columbia University revealed that these payments managed to reduce child poverty rates by almost 30%, benefiting approximately 61 million children in the United States.
Let’s quickly review what a Child Tax Credit, or CTC, is: it is an instrument that allows eligible taxpayers to reduce the amount of taxes they must pay based on the number of children they declare as dependents.
This federal credit, first introduced in 1997, currently provides up to $2,000 per child, of which $1,600 can be returned even if nothing is owed in taxes. However, the remaining $400 is non-refundable and only serves to minimize the tax burden.
The American Rescue Plan Act of 2021 established this figure, which will be extended through December 31, 2025, unless Congress chooses to extend it again. If there are no future extensions, the credit will return to its original amount of $1,000 for each dependent child under 16 years of age.
Child Tax Credits currently in effect in certain states
Beyond the federal credit, 16 states have implemented their own child tax credits, providing additional support to families. These states are: Arizona, California, Colorado, Idaho, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oklahoma, Oregon, Utah, and Vermont.
The details of these credits vary greatly between states, covering not only the amount offered, but also whether or not they are refundable, and the specific definitions of a dependent child.
Amounts and Eligibility of Credits by State
In Arizona, a $100 credit is offered per dependent child under age 17, although it is non-refundable. California gives up to $1,117 for each child under age 6, with an income threshold of $25,000 for the full amount. In Colorado, the credit can reach up to $3,200 per dependent under 16 years of age, being refundable and its specific amount will depend on marital status and income.
Idaho provides $205 per dependent child under age 17, while Illinois provides a credit of 20% of the state’s Earned Income Tax Credit. Maine offers $300 per dependent child under 17, and Maryland $500 for each child with a disability.
Massachusetts offers $180 for one child or $360 for two or more, and Minnesota offers $1,750 per child, as long as the taxpayer’s income is below the established limits. New Jersey allows a credit of $500 per dependent child under age 6 for those earning less than $30,000, which decreases as income increases.
New Mexico offers between $75 and $175 per dependent child under 17, and New York establishes a credit based on a percentage of the federal credit, guaranteeing a minimum of $100 per child.
Continuing with the list, Oklahoma offers a credit of 5% of the federal child tax credit per household, although this is non-refundable. It is important to note that it is not available to married couples filing jointly if their gross income exceeds $100,000.
Additionally, Oregon provides $1,000 per dependent child under age 5, which is refundable and restricted for families with an income of less than $30,000. Let’s keep going by mentioning Utah, which is granting $1,000 per dependent child between 1 and 3 years old, although this credit decreases by $10 for every $1 above a specific income threshold.
Finally, Vermont provides a credit of $1,000 per dependent child under 5 years of age, accessible to taxpayers with incomes less than $125,000, and is also refundable.