Preface; “For a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.”–Winston Churchill
What You Need to Know About the Child Tax Credit Changes in the OBBB Act
On July 4, 2025, President Trump signed the One Big Beautiful Bill (OBBB) Act into law. This new law includes many updates to the tax code for both individuals and businesses. One of the major changes in the bill is how it affects the Child Tax Credit (CTC) — including how much you can claim and who qualifies.
Let’s simplify it.
What Is the Child Tax Credit?
The Child Tax Credit is a tax break given to families with children. If you have a qualifying child under age 17, you can reduce your tax bill by claiming this credit.
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- Before 2025, you could claim up to $2,000 per child.
- After 2025, that amount was going to drop to $1,000.
- Under the OBBB Act, this has increased to $2,200.
There are 2 parts to the CTC, one is refundable and the other isn’t. The refundable portion has risen to $1,700 for 2025. In addition, there is a separate $500 credit for other dependents (like an elderly parent or college student you support). This second credit is non-refundable.
To qualify, the child must be a U.S. citizen, national, or resident, and you must list their Social Security number on your tax return.
Who Can Claim the Credit?
There are income limits that determine whether you can claim the full credit:
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- For 2025, the credit starts to phase out (gradually decrease) when your adjusted gross income (AGI) is over:
- $400,000 for married couples filing jointly
- $200,000 for all other taxpayers
- For 2025, the credit starts to phase out (gradually decrease) when your adjusted gross income (AGI) is over:
These income limits are now permanent under the OBBB Act.
What’s Changed Under the OBBB Act?
Here’s how the Child Tax Credit has changed with the new law:
1. Bigger Credit
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- The credit goes up to $2,200 per child starting in 2025.
- This amount will increase over time to keep up with inflation.
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2. Refundable Portion (ACTC)
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- If the credit is more than what you owe in taxes, part of it can be refunded to you as a check from the IRS. This is called the Additional Child Tax Credit (ACTC).
- The refundable portion is $1,700 in 2025 and will increase with inflation beginning in 2026.
- To qualify for the ACTC, you need to have at least $2,500 in earned income.
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3. Other Dependent Credit (ODC)
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- The $500 credit for non-child dependents (such as aging parents or students over 17) stays in place, but it does not increase with inflation.
Important Reminder: Social Security Numbers Are Required
You must include valid Social Security numbers (SSNs) for your child (and for yourself or at least one spouse if filing jointly) to claim the child tax credit. These SSNs must be employment-eligible.
Summary
| Feature | Old Rule | OBBB Act Update |
| Max Child Tax Credit | $2,000 | $2,200 (2025, inflation-adjusted) |
| ACTC Refundable Amount | $1,400 | $1,700 in 2025 and growing with inflation |
| Other Dependent Credit | $500 | $500 (no change, not inflation-adjusted) |
| Income Phaseout | $400,000 (MFJ), $200,000 (others) | Made permanent |
| SSN Requirement | Yes | Continues to apply |
Final Thoughts
The OBBB Act provides families with additional support starting in 2025 by increasing the Child Tax Credit and maintaining some generous income limits. But like all tax benefits, you’ll need to meet certain rules — like listing SSNs and filing correctly — to take full advantage.
If you’re unsure whether you qualify or how much of a credit you might get, talk to your tax advisor. Planning ahead can make a big difference in your refund or tax bill.
Let us know if you’d like help with tax planning for your family in light of these new rules!