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January 17, 2019
The Child Tax Credit
Calculating the Credit
Table 1. Overview of Key Aspects of the
When calculating the total amount of federal income taxes
Child Tax Credit Under Current Law
owed, eligible taxpayers can reduce their federal income tax
liability by the amount of the child tax credit. Currently,
Credit
eligible families that claim the child tax credit can subtract
Parameter
Current Law
Post 2025
up to $2,000 per qualifying child from their federal income
Max Credit
$2,000 (NII)
$1,000 (NII)
tax liability. The maximum amount of credit a family can
Per Child
receive is equal to the number of qualifying children in a
Max
$1,400 (II)
$1,000 (NII)
family multiplied by $2,000.
Refundable

If a family’s tax liability is less than the value of their child
Credit Per
Refundability $2,500 (NII)
$3,000 (NII)
Child
tax credit, they may be eligible for a refundable credit
Threshold
calculated using the earned income formula. The refundable
Refundability 15%
15%
portion of the credit is referred to as the additional child tax
Rate
credit, or ACTC. Under this formula, a family is eligible for
a refund equal to 15% of their earnings in excess of $2,500,
Phase-Out
$200,000 unmarried
$55,000 married
up to the maximum amount of the refundable portion of the
Threshold
taxpayer
separate return
credit. The maximum amount of the refundable portion of
$400,000 married joint
$75,000 unmarried
the credit is $1,400 per qualifying child.
return (NII)
taxpayer
$110,000 married
The $2,000-per-child value of the credit falls by a certain
joint return
amount as a family’s income rises. Specifically, for every
(NII)
$1,000 of modified adjusted gross income (MAGI) above a
Offfsets
Yes
Yes
threshold amount, the credit falls by $50—or effectively by
AMT tax
5% of MAGI above the threshold. The threshold amount
liability
Source: Internal Revenue Code, 26 U.S.C. §24.
depends on a taxpayer’s filing status, and equals $200,000
Notes: NII = not indexed for inflation. II = indexed for inflation.
for single parents and married taxpayers filing separate
returns, and $400,000 for married taxpayers filing joint
Definition of a Qualifying Child
returns. The actual income level at which the credit is
In order to claim the child tax credit, a taxpayer’s child
entirely phased out (i.e., equals zero) depends on the
must be considered “a qualifying child” and meet several
number of qualifying children a taxpayer has. Generally, it
takes $40,000 of MAGI above the phaseout threshold to
requirements that may differ from eligibility requirements
completely phase out $2,000 of credit. For example, the
for other child-related tax benefits:
credit will completely phase out for a married couple with
1. The child must be under 17 years of age
two children if their MAGI exceeds $480,000.
during the entire year for which the taxpayer
claims the credit.
The child tax credit can offset a taxpayer’s Alternative
2. The child must be eligible to be claimed as a
Minimum Tax (AMT) liability. Currently, the maximum
dependent on the taxpayer’s return.
credit per child, refundability threshold, and phaseout
3. The child must be the taxpayer’s son,
thresholds are not indexed for inflation. From 2018 to 2025,
daughter, grandson, granddaughter, stepson,
the maximum amount of the ACTC is indexed for inflation.
stepdaughter, niece, nephew, or an eligible
Table 1 provides an overview of key provisions of the child
foster child of the taxpayer.
tax credit under current law and how they will change, as
4. The child must live at the same principal
scheduled under P.L. 115-97.
residence as the taxpayer for more than half
the year for which the taxpayer wishes to
claim the credit.
5. The child cannot provide more than half of
their own support during the tax year.
6. The child must be a U.S. citizen or national. If
they are not a U.S. citizen or national, they
must be a resident of the United States.
The age and citizenship requirements for a qualifying child
for the child tax credit differ from the definition of
qualifying child used for other tax benefits and can cause
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The Child Tax Credit
confusion among taxpayers. For example, a taxpayer’s 18-
taxpayers whose income was too low to either qualify for
year-old child may meet all the requirements for a
the credit or be eligible for the full credit. ARRA lowered
qualifying child for the earned income tax credit (EITC),
the refundability threshold to $3,000 for 2009 through
but will be too old to be eligible for the child tax credit.
2010. The ARRA provisions were subsequently extended
several times and made permanent by the Protecting
ID Requirement to Claim the
Americans from Tax Hikes (PATH) Act (Division Q of
Child Tax Credit
P.L. 114-113). The PATH Act also required that beginning
The law requires that taxpayers who intend to claim the
with tax returns filed in 2017, any refund associated with
child tax credit provide a valid taxpayer identification
returns claiming the ACTC (and/or EITC) would be held by
number (TIN) for each qualifying child on their federal
the IRS until February 15. This provision was coupled with
income tax return. Under a temporary change in effect from
a requirement that employers furnish the IRS with W-2s
2018 through the end of 2025, the child’s TIN must be a
and information returns on nonemployee compensation
work-authorized Social Security number (SSN). The SSN
(e.g., 1099-MISCs) earlier in the filing season. Many
must be issued before the due date of the tax return. Failure
believe that more time to cross-check income on
to provide the child’s SSN may result in the taxpayer being
information returns will help reduce erroneous payments of
denied the credit (both the nonrefundable and refundable
the ACTC by the IRS.
portions of the credit).
At the end of 2017, President Trump signed into law P.L.
Absent any legislative changes, beginning in 2026, a valid
115-97, commonly referred to as the Tax Cuts and Jobs
TIN for qualifying children will include individual taxpayer
Act, or TCJA, which made numerous temporary changes to
identification numbers (ITINs) and Social Security numbers
individual income tax provisions, including the child tax
(SSNs). ITINs are issued by the Internal Revenue Service
credit. The act increased the maximum amount of the credit
(IRS) to noncitizens who do not have and are not eligible to
per child from $1,000 to $2,000, increased the maximum
receive SSNs. ITINs are supplied solely so that noncitizens
amount of the refundable tax credit per child from $1,000 to
are able to comply with federal tax law, and do not affect
$1,400, and increased the income level at which the credit
immigration status.
phases out from $110,000/$75,000 for married/unmarried
tax filers to $400,000/$200,000. The law also temporarily
In addition, in order to claim the child tax credit in a given
changed the ID requirements of the credit. These changes
tax year, the taxpayer must also provide their own taxpayer
are scheduled to be in effect from 2018 through the end of
identification number that must be issued before the due
2025.
date of the tax return. This is a permanent ID requirement
that is not scheduled to expire.
The legislative changes made to the child tax credit by P.L.
115-97 have significantly expanded the child tax credit,
Refund Timing
especially for upper-income taxpayers, as illustrated in
Taxpayers who claim the ACTC may experience a delay in
Figure 1.
receiving their refund. Tax filing season often begins
Figure 1. The Child Tax Credit for a Married Couple
around the end of January. Under current law, tax returns
with Two Children by Income Level,
that include a claim for the ACTC (and/or the EITC) are
Before and After P.L. 115-97
held until February 15. This can mean that taxpayers with
ACTC claims generally don’t receive their refunds until the
end of February at the earliest.
History and Background
The child tax credit was enacted as part of the Taxpayer
Relief Act of 1997 (P.L. 105-34). When it initially went
into effect in 1998, the credit was a $500-per-child
nonrefundable credit, which primarily benefited middle-
and upper-middle-income families. Since enactment,
various laws have modified key parameters of the credit,
expanding the availability of the benefit to more low-

income families while also increasing the amount of the tax
Note: This is a stylized example.
credit. The first significant change to the child tax credit
occurred with the enactment of the Economic Growth and
For more information on the child tax credit, including the
Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L.
$500 nonrefundable credit for non-child tax credit
107-16). EGTRRA increased the amount of the credit over
dependents, see CRS Report R41873, The Child Tax
time to $1,000 per child and made it partially refundable
Credit: Current Law, by Margot L. Crandall-Hollick; and
under the earned income formula.
CRS Report R45124, The Child Tax Credit: Legislative
History, by Margot L. Crandall-Hollick.
In 2008 and 2009, Congress passed legislation—the

Emergency Economic Stabilization Act of 2009 (EESA;
Margot L. Crandall-Hollick, Specialist in Public Finance
P.L. 110-343) and the American Recovery and
Reinvestment Act of 2009 (ARRA; P.L. 111-5)—that
IF11077
further expanded the availability and amount of the credit to
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The Child Tax Credit

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