The Child Tax Credit (CTC) is one of the most valuable tax credits available to families. For the 2025 tax year (returns filed in 2026), the CTC can reduce your tax bill dollar-for-dollar and, in some cases, increase your refund.

Understanding who qualifies — and how much the credit is actually worth — can make a significant difference at tax time.

What Is the Child Tax Credit?

The Child Tax Credit is a federal tax credit designed to help offset the cost of raising children. If you qualify, the credit directly reduces the amount of federal income tax you owe.

Under current law, the credit is:

Partially refundable
Based on your income, filing status, and number of qualifying children

Refundable means you may receive part of the credit even if you owe little or no federal income tax.

How Much Is the Child Tax Credit for 2025?

For the 2025 tax year, the Child Tax Credit is worth up to $2,000 per qualifying child under age 17.

Refundable Portion (Additional Child Tax Credit)

Up to $1,700 per child may be refundable, depending on your earned income
The refundable portion is claimed as the Additional Child Tax Credit (ACTC)

The exact refundable amount depends on your earned income and tax situation.

Who Qualifies for the Child Tax Credit in 2025?

To claim the CTC, both you and your child must meet IRS requirements.

Qualifying Child Rules

A qualifying child must:

Be under age 17 at the end of 2025
Be your son, daughter, stepchild, foster child, sibling, or descendant
Live with you for more than half the year
Not provide more than half of their own support
Be claimed as your dependent
Have a valid Social Security number

Income Limits (Phaseouts)

The Child Tax Credit begins to phase out once your modified adjusted gross income (MAGI) exceeds:

$200,000 for Single, Head of Household, or Married Filing Separately
$400,000 for Married Filing Jointly

Once above these thresholds, the credit is reduced by $50 for every $1,000 of income over the limit.

Can You Claim the Child Tax Credit If You’re Self-Employed?

Yes. Self-employed taxpayers can qualify for the Child Tax Credit as long as:

The child meets the qualifying tests
Your income is within the phaseout limits
You have sufficient earned income to qualify for the refundable portion

Self-employment income counts as earned income, which is key for the refundable credit calculation.

Child Tax Credit vs. Earned Income Tax Credit (EITC)

Many families qualify for both credits.

Credit	Based On	Refundable?
Child Tax Credit	Children + income	Partially
Earned Income Tax Credit	Earned income	Fully

Claiming both can significantly increase your refund — but errors can delay processing.

How to Claim the Child Tax Credit

To claim the CTC, you must file:

Form 1040 or 1040-SR
Include your dependent information correctly

For the refundable portion, the IRS calculates eligibility automatically based on your return.

Common mistakes that delay refunds:

Incorrect Social Security numbers
Claiming a child who doesn’t meet residency rules
Income mismatches with IRS records

How do I avoid mistakes?

Smart Value Accounting is determined to get you the credits and deductions that you deserve. Our in-house CPA is experienced in determining who qualifies for credits such as the CTC. Feel free to contact us for a quick consultation or fill out our questionnaire, and we can get you one step closer to receiving the Child Tax Credit.

Bottom Line: Is the Child Tax Credit Worth Claiming?

If you have qualifying children and your income falls within the limits, the Child Tax Credit can be worth thousands of dollars per year. However, eligibility rules, phaseouts, and refundable limits can make the calculation more complex than it appears.

A quick review can help ensure: