Child Tax Credit & EITC Explained (2026)

Under the 2025 tax law, the Child Tax Credit is worth up to $2,200 per qualifying child, indexed to inflation from 2026 onward. Part of it is refundable through the Additional Child Tax Credit (ACTC): for 2026 the refundable portion is up to $1,700 per child, and it is calculated as 15% of earned income above $2,500. A family with little or no tax liability therefore still receives money back, provided someone in the household works.

The credit falls by $50 for every $1,000 (or part of $1,000) of modified adjusted gross income above the threshold. Most middle-income families therefore receive the full amount.

A child must pass all of the following tests for the CTC:

• Age: under 17 at the end of the tax year.
• Relationship: your son, daughter, stepchild, foster child, sibling, half-sibling or a descendant of any of them (for example a grandchild or niece).
• Residency: lived with you for more than half the year (temporary absences such as school count as time at home).
• Support: did not provide more than half of their own support.
• Dependency: claimed as your dependent and not filing a joint return (except to claim a refund).
• Identification: a valid Social Security number issued before the return due date. Under current law, at least one parent must also have an SSN.

Children aged 17 or 18, and full-time students under 24, do not qualify for the CTC but may still bring the $500 Credit for Other Dependents.

The EITC is designed for low- and moderate-income workers. It is fully refundable and grows as earnings rise, reaches a plateau, and then phases out. The amount depends on your earned income, filing status and the number of qualifying children. For 2026 the IRS inflation adjustments set the maximum credits approximately as follows:

Investment income must also stay below an annual cap (about $12,200 for 2026). Workers without children qualify only if they are between 25 and 64. Always confirm the final figures in IRS Publication 596 before filing.

Maria is a single parent of two children aged 6 and 9. She earns $32,000 in wages and files as head of household. Her standard deduction is $24,150, so her taxable income is $7,850 and her federal income tax before credits is about $785.

• Child Tax Credit: 2 × $2,200 = $4,400. The non-refundable part wipes out her $785 tax.
• Additional Child Tax Credit: 15% × ($32,000 − $2,500) = $4,425, capped at 2 × $1,700 = $3,400 refundable.
• EITC with two children at $32,000 of income: roughly $5,800 after partial phase-out.
• Total refund: about $9,200, plus any federal income tax withheld from her paychecks.

You can model the withholding side of this scenario with our paycheck calculator and the tax side with the federal income tax calculator.

The PATH Act requires the IRS to hold refunds that include the EITC or ACTC until mid-February, even if you file in January. This gives the agency time to verify income against W-2s and reduce fraud. Most such refunds arrive by early March for e-filers who choose direct deposit.

• Both separated parents claiming the same child. Only one can claim; the tie-breaker rules usually favor the parent the child lived with longer.
• Using the wrong filing status. Head of household requires paying more than half the cost of keeping up the home.
• Misreporting self-employment income. Under- or over-stating Schedule C profit changes the EITC and triggers audits.
• Forgetting the credits on the W-4. Step 3 of Form W-4 lets you reduce withholding so you receive the benefit during the year.

More than 30 states and DC offer their own earned income credit, usually a percentage of the federal EITC, and several (including California, Colorado and New York) offer a state child tax credit. Check your state's revenue department or browse our state salary pages for local context.