The 2026 credit, the refundable part and the income phase-out
Updated October 2026
Amount. $2,200 per qualifying child for 2025 and 2026, set by Public Law 119-21 and indexed for inflation after that. Refundable part. Up to $1,700 per child for 2026 as the additional child tax credit (ACTC), which requires at least $2,500 of earned income. Other dependents. $500 for each dependent who is not a qualifying child, such as a 17-year-old, a college student or a parent you support; this part is never refundable. Phase-out. $50 less for each $1,000 or part of $1,000 of modified AGI above $200,000, or $400,000 on a joint return. Identification. The child needs a Social Security number valid for work, issued by the return’s due date, and at least one parent (one spouse on a joint return) must have one too. Other dependents may use an ITIN or ATIN.
Qualifying child. Under 17 at the end of the year; your son, daughter, stepchild, eligible foster child, sibling, step-sibling or a descendant of one of them; lived with you more than half the year; did not pay over half of their own support; is claimed as your dependent; and is a U.S. citizen, national or resident alien.
Married couple, two children aged 4 and 9, $60,000 of wages and no other income.
1. Credit before limits: 2 × $2,200 = $4,400. Income is far below $400,000, so no phase-out.
2. Tax before credits: $60,000 − $32,200 standard deduction = $27,800 taxable; 10% of $24,800 + 12% of $3,000 = $2,840.
3. Nonrefundable part used: $2,840, bringing income tax to zero. Unused: $1,560.
4. Refundable part: the smallest of the unused $1,560, $1,700 × 2 = $3,400, and 15% × ($60,000 − $2,500) = $8,625. Result: $1,560.
5. Total benefit: $2,840 + $1,560 = $4,400, the full credit.
Qualifying children are the dependents under 17 who pass the tests above and have SSNs. Other dependents are everyone else you claim. AGI is Form 1040 line 11 (modified AGI adds back only foreign earned income and certain territory income). Earned income is wages (W-2 box 1) plus net self-employment earnings; it drives only the refundable part. The results show the credit before limits, the phase-out, your tax before credits, how much of the credit that tax absorbs, the refundable amount, and any part you cannot use.
| Family (2026) | Tax before credits | Credit used | Refundable | Total benefit |
|---|---|---|---|---|
| Married, 2 children, $60,000 | $2,840 | $2,840 | $1,560 | $4,400 |
| Married, 2 children, $35,000 | $280 | $280 | $3,400 | $3,680 |
| Head of household, 1 child, $20,000 | $0 | $0 | $1,700 | $1,700 |
| Head of household, 2 children, $45,000 | $2,148 | $2,148 | $2,252 | $4,400 |
| Married, 3 children, $120,000 | $10,040 | $6,600 | $0 | $6,600 |
The second family owes only $280 of tax, so most of its benefit is the refundable part, capped at $1,700 per child. Lower-income families with little tax rely on the ACTC, which is why earned income matters.
| Family | Modified AGI | Reduction | Credit left |
|---|---|---|---|
| Married, 2 children | $400,000 | $0 | $4,400 |
| Married, 2 children | $420,000 | $1,000 | $3,400 |
| Married, 2 children | $450,000 | $2,500 | $1,900 |
| Married, 2 children | $488,000 | $4,400 | $0 |
| Head of household, 1 child | $200,000 | $0 | $2,200 |
| Head of household, 1 child | $230,000 | $1,500 | $700 |
| Head of household, 1 child | $244,000 | $2,200 | $0 |
Because the reduction counts each $1,000 or part of it, $400,001 of income on a joint return already costs $50. Two children’s $4,400 is gone completely at $488,000 joint or $288,000 for other filers; one child’s $2,200 at $444,000 or $244,000.
It uses the standard refundable formula and does not apply the alternative for families with three or more children (Social Security and Medicare taxes paid minus the earned income credit) when that gives more. It assumes the standard deduction and no other credits; in practice nonrefundable credits such as the child and dependent care credit are applied in a set order and can leave less tax for this credit to absorb. It does not cover the earned income credit, state child tax credits, or returns from Puerto Rico. Divorced or separated parents deciding who claims a child, families with a child who has an ITIN, and anyone whose child turned 17 during the year should check the Schedule 8812 instructions or ask a tax professional.
The age-17 cliff. A child who turns 17 on or before December 31 qualifies only for the $500 credit for other dependents for that year. Late or missing SSNs. A number issued after the return’s due date (with extensions) does not qualify the child for that year, and a parent without an SSN blocks the credit under the 2025 law unless the other spouse on a joint return has one. Custody. The custodial parent claims the child unless they sign Form 8332 releasing the claim to the other parent; the child care credit and head-of-household status stay with the custodial parent. Expecting monthly payments. Advance monthly payments existed only for 2021; the credit now arrives with your tax refund. Too little earned income. With $2,500 or less of earnings, no part of the credit is refundable.