For parents navigating the financial demands of raising children, Child Tax Credits (CTCs) offer essential relief during tax season. These credits—available at both federal and state levels—provide substantial refunds for eligible families, helping to offset expenses like food, housing, education, and healthcare.
Federal Child Tax Credit: Key Details
The federal Child Tax Credit (CTC), first introduced in 1997, currently provides up to $2,000 per child, with $1,600 refundable even if no taxes are owed. However, the remaining $400 is non-refundable, serving only to reduce tax liability.
This expanded credit, established under the American Rescue Plan Act of 2021, is set to remain in effect until December 31, 2025, after which it may revert to its original value of $1,000 per child under age 16 unless Congress acts to extend the higher amount.
The impact of these credits has been transformative. Research from Columbia University’s Center on Poverty and Social Policy highlights that the expanded CTC in 2021 reduced child poverty by nearly 30%, benefiting approximately 61 million children across the United States.
State-Level Child Tax Credits: Additional Support
In addition to the federal credit, 16 states offer their own CTC programs, providing further financial assistance to families. The eligibility criteria, amounts, and refundability vary widely across states:
- Arizona: $100 per child under age 17 (non-refundable).
- California: Up to $1,117 per child under age 6, with income limits of $25,000 for the full amount.
- Colorado: Up to $3,200 per child under age 16, fully refundable.
- Idaho: $205 per child under age 17.
- Illinois: 20% of the state’s Earned Income Tax Credit (EITC).
- Maine: $300 per child under age 17.
- Maryland: $500 for each child with a disability.
- Massachusetts: $180 for one child, $360 for two or more.
- Minnesota: Up to $1,750 per child, with income thresholds.
- New Jersey: $500 per child under age 6 for incomes below $30,000 (phased out for higher incomes).
- New Mexico: $75 to $175 per child under age 17.
- New York: A percentage of the federal CTC, with a minimum of $100 per child.
- Oklahoma: 5% of the federal CTC (non-refundable), with income limits.
- Oregon: $1,000 per child under age 5, refundable for incomes below $30,000.
- Utah: $1,000 per child aged 1 to 3, decreasing by $10 for every $1 over the income threshold.
- Vermont: $1,000 per child under age 5, refundable for incomes below $125,000.
Maximizing Tax Season Benefits
The combination of federal and state-level Child Tax Credits can offer significant financial support to families. Parents are encouraged to explore their eligibility for these programs to maximize their tax refunds.
With the federal expansion set to expire in 2025 and the landscape of state programs continually evolving, staying informed about the latest updates is essential for families seeking to make the most of these benefits.
For detailed information, families can consult local tax authorities or visit the official IRS website to better understand their options and eligibility.
