2025 Child Tax Credit Updates: What You Need to Know

Why the 2025 Changes Matter

If you have children, the new rules for the Child Tax Credit (CTC) can significantly impact your tax bill. The updates for the 2025 tax year bring both higher benefit amounts and stricter eligibility requirements. With proper tax planning, you can make sure you don’t leave money on the table, or get surprised by new rules.

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What’s New for the Child Tax Credit in 2025

Here are the key updates for the CTC for tax year 2025:

• The maximum credit amount per qualifying child rises to $2,200 (up from $2,000). U.S. Bank+2Congress.gov+2
• The credit is now indexed for inflation going forward. Congress.gov+1
• The refundable portion (the part you may receive even if you owe little or no tax) remains capped at up to $1,700 per child for 2025 (subject to income and earned income requirements). Congress.gov+1
• Income phase-out thresholds: For full benefit, modified adjusted gross income (MAGI) must be below $200,000 for single filers and $400,000 for married filing jointly. Once income exceeds those thresholds, the credit begins to phase out. U.S. Bank+1
• Stronger eligibility requirements: Each qualifying child must have a valid Social Security number (SSN) before the filing due date, and for tax years 2025 onward, the taxpayer (or spouse if filing jointly) must also have a work-authorized SSN. TurboTax+1

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Who Qualifies—And Who Might Lose Out

To claim the 2025 Child Tax Credit, you must meet several criteria:

• The child must be under age 17 at the end of the tax year. IRS+1
• The child must be your son, daughter, stepchild, foster child, sibling, or descendant thereof, must live with you for more than half the year, and you must claim them as a dependent. IRS+1
• Both you (or your spouse) and the child must have valid SSNs/work-authorized SSNs. TurboTax+1
• Your income must stay under the phase-out thresholds to get the full credit. If your income is too high, the credit is reduced. U.S. Bank+1

It’s important to note that while the credit amount has gone up, stricter rules mean some families may no longer qualify for the full amount (or any amount) if they don’t meet the SSN requirement or have very low income but no earned income. 19th News+1

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Tax Planning Tips for the 2025 Child Tax Credit

Here’s how you can make the most of the credit and avoid surprises:

1. Verify SSNs early – Make sure you (and your spouse) and each child have the required valid SSNs/work-authorized SSNs before filing.
2. Monitor your income level – If your MAGI is approaching the phase-out threshold, consider ways to manage or defer income (where legal and applicable) so you don’t lose part of the credit.
3. Track your earned income – Since the refundable portion is partly tied to earned income, ensure you meet the earned income requirements.
4. Update your tax strategy – With a higher credit amount, your tax-planning conversations should revisit how the CTC impacts your business or personal income tax picture.
5. Claim early and correctly – Accuracy matters. Mistakes in dependents or SSN entries can delay or disqualify your credit. Working with a qualified tax professional can help you file correctly and timely.

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The Bottom Line

The 2025 Child Tax Credit updates bring a meaningful increase in benefit for many families, but new eligibility rules mean that staying informed and proactive is more important than ever. With the right planning you can reduce your tax burden and make the most of available credits.

At AEM Accounting LLC, we specialize in helping families and small business owners navigate changes like these. Let us guide you through the new rules, help you determine how much credit you qualify for, and align your tax strategy accordingly.

📞 Schedule your consultation today to review your eligibility for the 2025 Child Tax Credit and integrate this benefit into your broader financial and tax-planning strategy.