Many families we work with have the same question: Does the new One Big, Beautiful Bill raise the Child Tax Credit? The answer is yes, and there are some other important updates you should know about, too. As your CPA team, we want to walk you through what’s changing, what stays the same, and how it could impact your tax planning.
Child Tax Credit: What is the Current Baseline?
Before this bill, the Child Tax Credit was $2,000 per qualifying child, with eligibility depending on the child’s age, residency, and relationship. For higher-income families, the credit phased out at $200,000 for single filers and $400,000 for married couples filing jointly.
What Changes Under the Big Beautiful Bill for Child Tax Credits?
Here are the key updates to the Child Tax Credit under the new legislation:
- Higher credit amount: Starting in 2025, the credit increases to $2,200 per qualifying child.
- Income thresholds: The same phase-out thresholds remain in place — $200,000 for single filers and $400,000 for married filing jointly — and will apply in 2025 and 2026.
- Inflation adjustments: Beginning in 2026, the credit will be indexed for inflation. That means the $2,200 figure is just the starting point, and families may see modest increases over time.
- Refundable portion: In 2025, families may be able to receive up to $1,700 in refundable credits, even if they owe little or no federal income tax. The IRS will issue more guidance on how this works in practice.
- Permanency: The increase is permanent, so you don’t need to worry about the credit “sunsetting” in a few years.
- Social Security Number requirement: If applicable, the child and the filer (and spouse) must have valid SSNs to claim the credit.
You can read more about these changes in H.R. 1 on Congress.gov.
Child Tax Credits: What Hasn’t Changed
The basic eligibility rules for children are the same as before. The phase-out thresholds aren’t higher, so if your income already puts you near those levels, you’ll want to keep that in mind. Refundability is still partial; the bill doesn’t make everyone’s full credit refundable.
What This Means for Your Family
For most families, the increase means an extra $200 per child, or $400 if you have two qualifying children. Larger families will benefit even more. Because the credit is permanent and will grow with inflation, you can plan more confidently when budgeting for future tax years.
Some or all of your credit could phase out if your household income is close to or above the $200,000 or $400,000 thresholds. On the other hand, if your tax liability is low, you may still qualify for the refundable portion, which ensures you benefit from the increase even if you don’t owe much federal income tax.
Finally, the Social Security Number requirement has been strengthened, so all documentation must be accurate and current to avoid losing eligibility.
Be Prepared for Tax Season With CPA Nerds
Yes, the Big Beautiful Bill increases the Child Tax Credit to $2,200 per child, makes the change permanent, and adds inflation adjustments beginning in 2026. Contact our office today if you’re wondering how the new Child Tax Credit changes affect your family. We’ll review your eligibility, run the numbers for your situation, and help you confidently plan.
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