The Additional Child Tax Credit (ACTC) allows eligible taxpayers to receive a refundable portion of the Child Tax Credit even when they owe little or no federal income tax. For tax year 2025, filed in 2026, as much as $1,700 per qualifying child may be refundable, within a total Child Tax Credit of up to $2,200.
The refundable amount is not automatic. Taxpayers must qualify and claim it on a federal return.
The credit's refundable calculation depends on earned income, not just the amount of federal income tax owed. A household may qualify for the larger Child Tax Credit but receive less than the maximum refundable amount.
The rules also set income limits and require the child and taxpayer to meet specific tests. The forms and supporting information matter.
Earnings set the refundable amount, within a per-child cap
The IRS calculation generally allows a refundable amount equal to 15% of earned income above $2,500, up to the applicable per-child limit. Each dollar above the threshold adds 15 cents to the calculation until the cap is reached.
Earned income includes wages, tips and other compensation counted in gross income. It also includes net self-employment income after deducting half of the Social Security payroll taxes paid by a self-employed person.
Combat pay excluded from gross income under section 112 also counts in the calculation. The income definition can therefore include amounts that are treated differently for other tax purposes.
A parent with one child and $10,000 in earned income illustrates the formula. After subtracting $2,500, $7,500 remains; 15% of that is $1,125, before applying the per-child maximum.
Older IRS training material describes eligibility for taxpayers with three or more children regardless of income, and lists a $1,400 limit. That document reflects earlier parameters. The IRS's 2025 guidance gives a refundable maximum of up to $1,700 per child.
Income above the filing thresholds trims the credit
The full credit is available up to these modified adjusted gross income limits:
| Filing status | Income limit for the full credit |
|---|---|
| Single, head of household or married filing separately | $200,000 |
| Married filing jointly | $400,000 |
Above the applicable limit, the credit falls by $50 for every $1,000 of excess income, a reduction equal to 5% of the amount over the threshold. The credit continues to decline until it is eliminated.
This income reduction is separate from the earned-income calculation used to determine the refundable amount. A taxpayer must consider both rules.
A child must pass relationship, age, residence and identification tests
The child can be a son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother or half-sister. Descendants of those relatives, including grandchildren, nieces and nephews, may also qualify if the taxpayer can claim them as dependents.
The child must be under age 17 at the end of the tax year and be a U.S. citizen, U.S. national or U.S. resident alien. The child must have lived with the filer more than half the year and must not have provided more than half of their own support.
Both the taxpayer and child need valid Social Security numbers. The child's number must be valid for employment and issued before the return's due date. A taxpayer cannot amend a return to claim the credit for that child if the valid number is issued after the due date.
The ACTC is figured from the Child Tax Credit, not the Credit for Other Dependents. Someone claiming only the latter cannot claim this refundable credit.
A taxpayer who claims the foreign earned income exclusion, housing exclusion or housing deduction on Form 2555 cannot claim the ACTC. The credit is also unavailable through a claim based solely on the Credit for Other Dependents.
The filer must submit a return and Schedule 8812
Taxpayers claim the credit on Form 1040, Form 1040-SR or Form 1040-NR and complete Schedule 8812, Credits for Qualifying Children and Other Dependents. That schedule calculates the allowable amount.
The IRS does not issue the credit automatically. People who otherwise do not have to file still need to submit a return to claim it. For tax year 2026, filed in 2027, a return is needed to collect the credit; filing may also recover federal income tax withheld and estimated tax payments.
The IRS cannot issue a refund before mid-February for a return that properly claims the ACTC or Earned Income Tax Credit. The delay holds the entire refund, not only the credit amount. A return claiming only the Child Tax Credit does not face that delay unless it also claims the Earned Income Tax Credit.
A taxpayer whose Child Tax Credit, ACTC or Credit for Other Dependents was denied or reduced for a year after 2015 generally must attach Form 8862, Information To Claim Certain Credits After Disallowance, to a later return. The requirement applies when the reduction was for a reason other than a math or clerical error, unless an exception applies.
Disallowed claims can trigger a filing requirement or a bar
A reckless or intentional claim made while ineligible can bar the Child Tax Credit, ACTC and Credit for Other Dependents for 2 years, even if the taxpayer later qualifies. A fraudulent claim can trigger a 10-year bar, and penalties may apply.
The IRS Interactive Tax Assistant offers a free eligibility check. The IRS also warns taxpayers about promoters who make misleading credit claims while advertising large refunds. Keep records that support eligibility.
This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.
