January 17, 2019
The Child Tax Credit
Calculating the Credit
When calculating the total amount of federal income taxes
owed, eligible taxpayers can reduce their federal income tax
liability by the amount of the child tax credit. Currently,
eligible families that claim the child tax credit can subtract
up to $2,000 per qualifying child from their federal income
tax liability. The maximum amount of credit a family can
receive is equal to the number of qualifying children in a
family multiplied by $2,000.
If a family’s tax liability is less than the value of their child
tax credit, they may be eligible for a refundable credit
calculated using the earned income formula. The refundable
portion of the credit is referred to as the additional child tax
credit, or ACTC. Under this formula, a family is eligible for
a refund equal to 15% of their earnings in excess of $2,500,
up to the maximum amount of the refundable portion of the
credit. The maximum amount of the refundable portion of
the credit is $1,400 per qualifying child.
The $2,000-per-child value of the credit falls by a certain
amount as a family’s income rises. Specifically, for every
$1,000 of modified adjusted gross income (MAGI) above a
threshold amount, the credit falls by $50—or effectively by
5% of MAGI above the threshold. The threshold amount
depends on a taxpayer’s filing status, and equals $200,000
for single parents and married taxpayers filing separate
returns, and $400,000 for married taxpayers filing joint
returns. The actual income level at which the credit is
entirely phased out (i.e., equals zero) depends on the
number of qualifying children a taxpayer has. Generally, it
takes $40,000 of MAGI above the phaseout threshold to
completely phase out $2,000 of credit. For example, the
credit will completely phase out for a married couple with
two children if their MAGI exceeds $480,000.
The child tax credit can offset a taxpayer’s Alternative
Minimum Tax (AMT) liability. Currently, the maximum
credit per child, refundability threshold, and phaseout
thresholds are not indexed for inflation. From 2018 to 2025,
the maximum amount of the ACTC is indexed for inflation.
Table 1 provides an overview of key provisions of the child
tax credit under current law and how they will change, as
scheduled under P.L. 115-97.
Table 1. Overview of Key Aspects of the
Child Tax Credit Under Current Law
$400,000 married joint
liability Internal Revenue Code, 26 U.S.C. §24.
Notes: NII = not indexed for inflation. II = indexed for inflation.
Definition of a Qualifying Child
In order to claim the child tax credit, a taxpayer’s child
must be considered “a qualifying child” and meet several
requirements that may differ from eligibility requirements
for other child-related tax benefits:
1. The child must be under 17 years of age
during the entire year for which the taxpayer
claims the credit.
The child must be eligible to be claimed as a
dependent on the taxpayer’s return.
The child must be the taxpayer’s son,
daughter, grandson, granddaughter, stepson,
stepdaughter, niece, nephew, or an eligible
foster child of the taxpayer.
The child must live at the same principal
residence as the taxpayer for more than half
the year for which the taxpayer wishes to
claim the credit.
The child cannot provide more than half of
their own support during the tax year.
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
The Child Tax Credit
confusion among taxpayers. For example, a taxpayer’s 18year-old child may meet all the requirements for a
qualifying child for the earned income tax credit (EITC),
but will be too old to be eligible for the child tax credit.
ID Requirement to Claim the
Child Tax Credit
The law requires that taxpayers who intend to claim the
child tax credit provide a valid taxpayer identification
number (TIN) for each qualifying child on their federal
income tax return. Under a temporary change in effect from
2018 through the end of 2025, the child’s TIN must be a
work-authorized Social Security number (SSN). The SSN
must be issued before the due date of the tax return. Failure
to provide the child’s SSN may result in the taxpayer being
denied the credit (both the nonrefundable and refundable
portions of the credit).
Absent any legislative changes, beginning in 2026, a valid
TIN for qualifying children will include individual taxpayer
identification numbers (ITINs) and Social Security numbers
(SSNs). ITINs are issued by the Internal Revenue Service
(IRS) to noncitizens who do not have and are not eligible to
receive SSNs. ITINs are supplied solely so that noncitizens
are able to comply with federal tax law, and do not affect
In addition, in order to claim the child tax credit in a given
tax year, the taxpayer must also provide their own taxpayer
identification number that must be issued before the due
date of the tax return. This is a permanent ID requirement
that is not scheduled to expire.
Taxpayers who claim the ACTC may experience a delay in
receiving their refund. Tax filing season often begins
around the end of January. Under current law, tax returns
that include a claim for the ACTC (and/or the EITC) are
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.
taxpayers whose income was too low to either qualify for
the credit or be eligible for the full credit. ARRA lowered
the refundability threshold to $3,000 for 2009 through
2010. The ARRA provisions were subsequently extended
several times and made permanent by the Protecting
Americans from Tax Hikes (PATH) Act (Division Q of
P.L. 114-113). The PATH Act also required that beginning
with tax returns filed in 2017, any refund associated with
returns claiming the ACTC (and/or EITC) would be held by
the IRS until February 15. This provision was coupled with
a requirement that employers furnish the IRS with W-2s
and information returns on nonemployee compensation
(e.g., 1099-MISCs) earlier in the filing season. Many
believe that more time to cross-check income on
information returns will help reduce erroneous payments of
the ACTC by the IRS.
At the end of 2017, President Trump signed into law P.L.
115-97, commonly referred to as the Tax Cuts and Jobs
Act, or TCJA, which made numerous temporary changes to
individual income tax provisions, including the child tax
credit. The act increased the maximum amount of the credit
per child from $1,000 to $2,000, increased the maximum
amount of the refundable tax credit per child from $1,000 to
$1,400, and increased the income level at which the credit
phases out from $110,000/$75,000 for married/unmarried
tax filers to $400,000/$200,000. The law also temporarily
changed the ID requirements of the credit. These changes
are scheduled to be in effect from 2018 through the end of
The legislative changes made to the child tax credit by P.L.
115-97 have significantly expanded the child tax credit,
especially for upper-income taxpayers, as illustrated in
Figure 1. The Child Tax Credit for a Married Couple
with Two Children by Income Level,
Before and After P.L. 115-97
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 middleand upper-middle-income families. Since enactment,
various laws have modified key parameters of the credit,
expanding the availability of the benefit to more lowincome families while also increasing the amount of the tax
credit. The first significant change to the child tax credit
occurred with the enactment of the Economic Growth and
Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L.
107-16). EGTRRA increased the amount of the credit over
time to $1,000 per child and made it partially refundable
under the earned income formula.
In 2008 and 2009, Congress passed legislation—the
Emergency Economic Stabilization Act of 2009 (EESA;
P.L. 110-343) and the American Recovery and
Reinvestment Act of 2009 (ARRA; P.L. 111-5)—that
further expanded the availability and amount of the credit to
Note: This is a stylized example.
For more information on the child tax credit, including the
$500 nonrefundable credit for non-child tax credit
dependents, see CRS Report R41873, The Child Tax
Credit: Current Law, by Margot L. Crandall-Hollick; and
CRS Report R45124, The Child Tax Credit: Legislative
History, by Margot L. Crandall-Hollick.
Margot L. Crandall-Hollick, Specialist in Public Finance
The Child Tax Credit
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