Refundable vs. nonrefundable: what it means for your refund
A nonrefundable credit can eliminate the tax you owe but won’t pay out any excess. A refundable credit can be refunded to you even if your tax bill is zero.
The Child Tax Credit has both—the base credit is nonrefundable, and the ACTC is the refundable piece.
How much of the Child Tax Credit is refundable
Up to $1,700 per qualifying child is refundable through the ACTC for 2025 and 2026, versus the $2,200 full credit. The One Big Beautiful Bill Act made those amounts permanent and tied them to inflation.
Note: The total amount per child can be no more than $2,200.
How the refundable amount is calculated
The refundable ACTC is 15% of earned income over $2,500, capped at $1,700 per child. Two examples:
- A parent earning $25,000 with one child: ($25,000 − $2,500) x 15% = $3,375. That’s over the cap, so they would receive the full $1,700.
- A parent earning $8,000 with one child: ($8,000 − $2,500) x 15% = $825; their refundable amount is capped at $825, not $1,700.
Child Tax Credit vs. Additional Child Tax Credit
Here’s how the two credits compare.
| Feature | Child Tax Credit (CTC) | Additional Child Tax Credit (ACTC) |
|---|---|---|
| Refundable? | No | Yes |
| Max per child (2025–2026) | Up to $2,200 | Up to $1,700 |
| Key requirement | Qualifying child with a valid SSN | At least $2,500 earned income |
Source: IRS Child Tax Credit information; Schedule 8812.
Why your refund might be less than the full credit
Two things can reduce it. First, the base credit only offsets tax you actually owe. Second, the refundable ACTC is capped at $1,700 and limited by the 15%-of-earnings formula, so lower earners may not reach the cap. At the other end, the credit starts to phase out once your modified adjusted gross income tops $200,000 ($400,000 if you file jointly).
How to claim the child tax credit
- File Schedule 8812 with your Form 1040.
- Make sure each qualifying child has a valid Social Security number.
- Keep in mind that by law, refunds that include the ACTC are held until mid-February.
