The Child Tax Credit (CTC) is one of the most valuable tax benefits available to families, often worth more than any single deduction. For 2026 it grows under the OBBBA, but the eligibility rules, refundable portion, and phase-out thresholds all matter for figuring out exactly what your family qualifies for. Here is the full picture in one place.
The Basics
In 2026, each qualifying child is worth a $2,200 credit (up from $2,000 in prior years). To be a qualifying child, they generally must: be under 17 at the end of the tax year; be your son, daughter, stepchild, foster child, sibling, or a descendant of any of these (like a grandchild); live with you for more than half the year; receive more than half of their financial support from you; and have a Social Security Number valid for employment issued before the filing deadline.
Refundable vs. Non-Refundable Portions
The credit works in two stages. First, it wipes out your federal income tax bill down to zero — this is the non-refundable portion, and it can't take your tax below zero on its own. If any credit remains after that, the Additional Child Tax Credit (ACTC) can return up to $1,700 per child as an actual refund, even if you owed no tax at all for the year. The refundable amount is calculated as 15% of your earned income above $2,500, capped at $1,700 per child — so very low-income families with little earned income may not receive the full refundable amount, even though the credit itself is $2,200 per child.
Example: a single parent with one child and $2,200 of total tax liability before credits simply has that liability reduced to $0 — the full $2,200 offsets tax owed directly. A different parent who owes only $500 in tax uses $500 of the credit non-refundably, and (assuming sufficient earned income) can receive up to $1,700 of the remaining $1,700 as an actual refund via the ACTC.
Income Phase-Out Thresholds
Above $200,000 (Single, Head of Household, or Married Filing Separately) or $400,000 (Married Filing Jointly), the credit shrinks by $50 for every $1,000 — or part of $1,000 — of income over the threshold. Example: a joint filer earning $420,000 is $20,000 over the $400,000 threshold, so the total credit drops by 20 × $50 = $1,000 per child.
Second example: a single filer earning $215,000 with one child is $15,000 over the $200,000 threshold, losing 15 × $50 = $750 and leaving a $1,450 credit for that child instead of the full $2,200.
Credit for Other Dependents
Not every dependent qualifies for the full Child Tax Credit. A dependent who doesn't meet the "under 17" test — a 17- or 18-year-old, a full-time college student up to 24, or a dependent parent or relative you support — may still qualify for the smaller, non-refundable Credit for Other Dependents, worth $500 per dependent, subject to the same phase-out thresholds as the CTC.
How to Claim It
The Child Tax Credit and Additional Child Tax Credit are claimed on Form 1040 using Schedule 8812, which walks through the qualifying-child tests and computes both the non-refundable and refundable portions automatically for a paper or software filer. Tax software and most paid preparers handle this calculation without any extra input beyond listing your dependents correctly.
How the Calculator Applies the CTC
Enter the number of qualifying children and the tool subtracts $2,200 per child from your income tax, treating up to $1,700 per child as refundable — which is why larger families sometimes see a negative income tax line (a net refund) even before considering withholding. Note that the calculator does not currently model the income phase-out, so higher-income households should verify their actual credit amount with a tax professional or the IRS's own worksheets.
💡 If you're near the $200,000/$400,000 phase-out threshold, additional pre-tax 401(k) or traditional IRA contributions lower your AGI directly — which can simultaneously cut your income tax and help preserve more of the Child Tax Credit.
Divorced or Separated Parents: Who Claims the Child?
Only one parent can claim a given child's Child Tax Credit in a given year. By default, the custodial parent — the one the child lived with for more nights during the year — claims the credit. The noncustodial parent can only claim it if the custodial parent signs Form 8832 (Release/Revocation of Release of Claim to Exemption), which is often addressed in the divorce or custody agreement itself. Splitting the credit between parents in the same year, or both parents claiming the same child, is a common error that triggers an IRS notice and delays refunds for both filers.
A Third Example: Phase-Out Plus Refundability Together
A single parent with two children earns $210,000. That's $10,000 over the $200,000 single-filer threshold, reducing the total credit by 10 × $50 × 2 children = $1,000, leaving $3,400 of credit across both children instead of the full $4,400. Because this filer's income tax liability is well above $3,400, the entire remaining credit is used non-refundably against tax owed — the refundable ACTC portion only becomes relevant for filers whose tax liability is smaller than their available credit.
State-Level Child Tax Credits
A number of states layer their own child tax credit on top of the federal one, with separate rules, amounts, and phase-outs that vary widely. Check the calculator's State Tax tab or your state revenue department's site to see whether your state offers one — it's easy to overlook since it doesn't appear anywhere on the federal return.