Tax credits allow you to directly reduce the amount of taxes payable, as long as specific conditions are met during the corresponding fiscal year. For 2025, the Internal Revenue Service (IRS) has updated the amounts and criteria for several federal benefits aimed at individuals and families. This report details the options available and factors that could limit access to these incentives.
The Earned Income Tax Credit (EITC) is aimed at low- and moderate-income workers. The maximum amounts vary depending on the number of children: for families with three or more children, the benefit reaches $8,046, adjusted for inflation. “This credit is key to reducing poverty in households with low-wage jobs,” official documents state.
More tax credits you could request in 2025
The Child Tax Credit (CTC) grants $2,000 annually for each child under 17 years of age, of which $1,700 is refundable. The income limits to access the benefit are $200,000 for single taxpayers and $400,000 for couples filing their return jointly. In addition, there are other tax incentives such as the Child and Dependent Care Credit, which covers up to $3,000 in expenses for one child and up to $6,000 if you have two or more.
The American Opportunity Credit (AOTC) provides up to $2,500 annually per part-time college student. For its part, the Saver’s Credit encourages contributions to retirement plans with a benefit of up to $1,000 for individuals and $2,000 for couples. Additionally, the Premium Tax Credit reduces the costs of health insurance purchased through the Marketplace, applying to those with income between 100% and 400% of the federal poverty level.
Factors that impede access to tax credits
Changes in income, family composition, or employment status may disqualify taxpayers from certain benefits. For example, those with annual incomes greater than $66,819 (for married couples) no longer qualify for the Earned Income Credit (EITC). Likewise, the CTC is reduced by $50 for every $1,000 that exceeds $200,000 in the case of singles. “Inflation and wage increases can exclude those who previously qualified,” experts warn.
Losing custody of a child, getting divorced, or being widowed alters the CTC and EITC calculations. The first requires that the minor live with the taxpayer for at least six months and have a valid Social Security number. In the workplace, stopping work voids the EITC, while if a spouse leaves employment, the Child Care Credit is lost.
The AOTC only applies for four years per student, and its assembly depends on enrollment in degree programs. At the same time, errors in reporting a dependent’s Social Security number or failure to file Form 8880 for the Saver’s Credit can block benefits.
Specialists suggest reviewing the requirements for each credit annually, especially after changes such as births, adoptions or inheritances. Using IRS tools or consulting a certified tax advisor helps avoid lost profits. A critical fact: the EITC does not apply if investment income exceeds $11,600, a limit that many overlook.
