How the child tax credit works in 2026

The child tax credit reduces your federal income tax by up to $2,200 per qualifying child for 2026 under the 2025 tax law, which made the enlarged credit permanent — up from $2,000 under prior law. It phases out above $200,000 of modified adjusted gross income for single filers and $400,000 for joint filers, at $50 of credit lost per $1,000 over the threshold, and up to $1,700 of the 2026 credit is refundable — meaning part of it arrives as a refund even when you owe no income tax at all, subject to earned-income rules the IRS publishes each year.

SAMCASH publishes information, not tax advice — credit value depends on your income, children's ages, and residency facts, and the IRS pages control.

Who qualifies as a qualifying child?

Four tests, each mechanical. Age: under 17 at the end of the tax year. Relationship: son, daughter, grandchild, sibling, or various foster and step arrangements. Dependency: the child must be claimed as your dependent. Residency: lived with you for more than half the year, with exceptions for divorce situations spelled out in IRS rules — generally the custodial parent claims the credit unless Form 8332 reallocates it. A child who turns 17 in December converts the credit to the smaller $500 credit for other dependents, a cliff worth planning around in split-custody and blended families.

How does the refundable portion work?

In two layers. First, the credit offsets tax you owe — a household with $3,000 of tax liability and two qualifying children sees that bill fall to zero on $4,400 of credit. Second, the refundable portion (up to $1,700 per child for 2026) can send back actual cash when the offset exceeds liability — but only up to earned income thresholds, which is where the mechanics bite: families with very low or zero earned income get a partial or zero refundable amount, and the phase-in formula, published by the IRS with each year's inflation adjustments, determines exactly how much. The additional child tax credit is the line on the return that computes this — Schedule 8812 walks the math.

Illustrative cases — refundable amounts depend on the year's earned-income formula on Schedule 8812.

What changed under the 2025 law?

Three things families notice. The base credit rose to $2,200 per child, indexed for inflation in later years. The refundable portion's reach expanded, pushing more of the credit toward lower-working-income households. And the phase-out thresholds held at $200,000/$400,000 — high enough that most families never think about them, with the reduction itself computed at $50 per $1,000 above the line. The credit arrives as part of the annual return; there is no monthly advance structure like the temporary 2021 payments, and proposals to revive one remain proposals.

How do you actually claim it?

1. File the return and enter each qualifying child with a valid Social Security number — the SSN requirement is strict, and ITINs do not qualify for this credit.
2. Let the software or Schedule 8812 compute the refundable split; check that earned income entered correctly, since it drives the refundable layer.
3. Share-credit households: the custodial parent claims by default; Form 8332 transfers the claim in writing when the divorce decree or an agreement says so.
4. Watch the PATH Act timing — by law, refunds involving the refundable child credit cannot be issued before mid-February, so late-February deposits are normal even for January filings.

What about the credit for other dependents?

The $500 non-refundable version covers dependents who miss the child tests — a 17-year-old senior, a college student, an elderly parent you support. Same return, smaller number, and it disappears entirely once tax liability hits zero because it is never refundable. Families with a child aging out mid-decade often plan the final year of the full credit alongside first-job income and education credits.

FAQ

Can I get the credit with no income?

Not the refundable portion at zero earned income — the phase-in requires earnings, so households with no work income generally receive nothing refundable, while the nonrefundable part waits for tax to offset. A small earned-income year still earns partial refundability.

Do divorced parents both claim it?

No — one claim per child, defaulting to the parent with majority physical custody. The other parent claims only with a signed Form 8332; double-claiming triggers IRS matching notices and repayments with interest.

Is the credit different in a presidential-budget proposal I read about?

Proposals change the number annually; the law sets it until changed. For 2026 the working figure is $2,200 per qualifying child with up to $1,700 refundable — verify against the IRS page each filing season, since that is the number the return computes from.