Amid tax season, the much-awaited relief refund is still waiting on a lot of families and individuals who have spent their money on various expenses for their daily living.
The aid of $1500 and $1200—the figures of the previous years which had been given to the child tax credit—were known to be largely popular among American mothers and fathers. Those installments, disbursed in parallel with the credits every month throughout 2020, were used by families to pay, among other things, for food, shelter, and school supplies that were needed during the coronavirus pandemic.
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What do you think? Is it likely that the Economic Impact Payments will be coming back this year?
Let me update you on the current situation, including the Child Tax Credit in 2025, as well as what is necessary for families to be aware of.
What Happened to the $3,600 Child Tax Credit?
In 2021, the Child Tax Credit was temporarily increased under the American Rescue Plan Act of Congress to:
- $3,600 per child under age 6
- $3,000 per child ages 6 to 17
It provided for the distribution of advance monthly payments by the Internal Revenue Service (IRS) from July to December of that year. This transition represented the most important tax credit policy change that the families experienced, as those credits were mainly used as a source of families’ current life expenses instead of as a post-refund.
Nevertheless, the credit expansion was good only for 2021 tax. It expired in December 2021 and Congress has not subsequently approved those larger amounts.
What Is the Child Tax Credit in 2025?
Currently, the 2025 Child Tax Credit continues to be $2,000 for each child under the age of 17 who meets the conditions for getting the tax credit. This is the rate that has been in effect since 2018 as a result of the TCJA being passed.
Here’s how it will work in 2025:
- The maximum amount you can get for each eligible child is $2,000
- Of the entire amount of the credit, maximum $1,600 is refundable (this means you will get a payout even if you bear no taxes)
- The credit starts to be shrunk at the stage of $200,000 of income for unmarried tax payers or $400,000 for married people filing jointly
Your claiming it has to be had by the time the IRS Form 1040 and Schedule 8812 are filed.
Credit Refund- Is $3,600 Possible?
For now, there is no definite bill that can restore the $3,600 or $3,000 Child Tax Credit to the scene.
Nevertheless, there are some talks in Congress. A few lawmakers have offered a limited increase or the expansion of refundability for the less affluent. A few Democrats are interested in rolling out the full monthly advanced payment model of the credit. However, the Republicans are concerned about the misuse of the program and its long-term costs.
These plans are still not fully ratified and, up to now, nothing has been passed into law by Congress. Thus, the $2,000 credit remains as is.
What If There Is No Congress Action Taken?
This part is extremely important: without a new law, the $2,000 credit will be non-existent by the end of 2025.
If there is no action by the Congress, starting in 2026, the Child Tax Credit will automatically reduce to $1,000 for every child. The explanation here is that the TCJA sunset clause would retrogress some tax benefits back to their 2017 levels.
More urgency has therefore arisen as the potential drop may affect many families without an extension or expansion, advocates say.
Who are potential beneficiaries of the credit in 2025?
In order to get the entire credit for this year, your kid(s) should:
- Be under 17 at the end of 2025
- Be a dependent
- Live with you for the majority of the year
- Have a valid Social Security number
- Be a U.S. citizen or resident alien
Additionally, your income must not exceed the phase-out limits. If your earnings are high, your credit can become less or nothing.
At the moment, families have no reason at all to assume that the Child Tax Credit of $3,600 or $3,000 will be partially or fully restored in 2025. The possibility of Congress revisiting the issue by the end of the year is not ruled out but very far from certain.
Currently, the $2,000 credit is still there, and the majority of laboring families with children can present before them, when paying their taxes in 2026. You should be ready for any legislative changes that may come, especially as the lawmakers are debating more comprehensive tax reform in 2026.
This developing story will be kept an eye on, and the updates will be given as soon as they are made. The latest information can always be checked in our Tax News sector.
