Families filing taxes for the 2025 tax year and heading into the 2026 refund season could see meaningful changes to their refunds because of updates to the child tax credit tied to President Donald Trump’s legislation, often referred to as the “big beautiful bill.”
The changes permanently raise the maximum child tax credit to $2,200 per child, up from $2,000, starting with the 2025 tax year. While the increase may sound modest at first glance, it can translate into hundreds of dollars more per child for millions of families, depending on income, tax liability, and refund eligibility.
Below is a detailed breakdown of how the updated child tax credit works, who qualifies, how refunds may change in 2026, and why many families still may not receive the full $2,200 amount.
What Changed Under Trump’s Child Tax Credit Update
The most significant change is the permanent increase in the maximum child tax credit. Beginning with the 2025 tax year:
- The maximum credit rises to $2,200 per qualifying child
- The credit will be indexed to inflation starting in 2026
- Income phaseout thresholds remain unchanged
- Refundability rules still limit how much lower-income families can receive
For families who already qualified for the full $2,000 credit in previous years, this update may result in a $200 higher refund or $200 lower tax bill per child when filing the 2025 return in early 2026.
Why This Matters for the 2026 Tax Season
The 2026 tax season will be the first full filing season reflecting the higher $2,200 credit. That means refunds issued in 2026 could be larger for qualifying families, especially those with multiple children.
According to recent estimates:
- About 90 percent of families with children received the child tax credit in recent years
- The average tax break per family was more than $2,500
- Nearly 37 million tax returns claimed the child tax credit or credit for other dependents in a single year
With the higher maximum credit now locked in, even small changes can add up quickly for households with two or more children.
How the Child Tax Credit Works in 2025 and 2026
The child tax credit is not a flat payment that every family receives automatically. Instead, it works in layers depending on income, tax liability, and earnings.
Maximum Credit Amount
- Up to $2,200 per qualifying child for the 2025 tax year
- Applies to children under age 17 at the end of the year
- Credit amount is the same regardless of expenses
However, not everyone can access the full amount.
The Refundable Portion: Additional Child Tax Credit Explained
If your total child tax credit is larger than the federal income taxes you owe, you may be eligible for the Additional Child Tax Credit (ACTC). This is the refundable portion of the benefit.
Key limits to know:
- The maximum refundable amount is $1,700 per child
- Refundability is capped even if the total credit is $2,200
- Families with zero tax liability cannot receive more than $1,700 per child as a refund
This means that many lower-income families will not receive the full $2,200, even though that is the headline amount.
Why Some Families Get the Full $2,200 and Others Do Not
To receive the full credit, families generally need some federal tax liability. The difference between the $2,200 maximum credit and the $1,700 refundable cap is $500, which can only be used to offset taxes owed.
If you owe federal income taxes:
- The credit first reduces your tax bill
- Any remaining amount may be refunded up to the $1,700 cap
If you owe no federal income tax:
- You are limited to the refundable portion
- The extra $500 per child is not paid out
This structure means middle-income families are more likely to benefit from the full increase than very low-income households.
Income Requirements and Phaseout Rules
The income limits for the child tax credit have not changed under the new law.
The credit begins to phase out once income exceeds:
- $200,000 for single filers and heads of household
- $400,000 for married couples filing jointly
Above these levels, the credit is reduced gradually until it phases out completely.
For most families earning below these thresholds, income limits will not affect eligibility.
Earnings Requirement for Refundability
To receive the refundable portion of the credit, families must meet an earnings threshold.
Here is how it works:
- The credit begins to phase in after $2,500 of earned income
- The refundable amount equals 15 percent of earnings above $2,500
- This continues until the refund reaches the $1,700 cap per child
Because of this formula, families with very low earnings may receive less than the maximum refundable amount, even if they have qualifying children.
Who Qualifies for the Child Tax Credit
To claim the child tax credit, families must meet several IRS rules.
Age Requirement
- The child must be under age 17 at the end of the tax year
Relationship Requirement
- The child must be your son, daughter, stepchild, foster child, sibling, or a descendant of one of these
Residency Requirement
- The child must have lived with you for more than half the year
Support Requirement
- You must have provided more than half of the child’s financial support
Citizenship and Identification
- The child must have a valid Social Security number
- For married couples filing jointly, at least one filer must have a Social Security number
How This Credit Compares to Other Family Tax Breaks
The child tax credit is different from other family-related credits.
Child and Dependent Care Tax Credit
- Covers a portion of child care expenses
- Applies to children under age 13
- Based on actual expenses incurred
- Has separate income rules and limits
The child tax credit, by contrast, is not tied to expenses. It is based solely on income and whether you have a qualifying child.
How the Increase Could Affect Your Refund
If you previously qualified for the full $2,000 credit, the new law may result in:
- A $200 larger refund per child, or
- A $200 reduction in taxes owed per child
For a family with two children, that could mean $400 more at tax time. For larger families, the increase grows quickly.
However, families already limited by the refundable cap may see little or no change, since the refund maximum only rose to $1,700.
Why Many Families Still Will Not Receive the Full Credit
Despite the higher maximum amount, analysts estimate that millions of families will not receive the full $2,200.
Reasons include:
- Low earnings that limit refundability
- Zero federal income tax liability
- The $1,700 refundable cap
- The $2,500 earnings threshold
These restrictions mean the headline increase does not translate equally across income levels.
Indexing to Inflation Starting in 2026
One major long-term change is that the child tax credit will now be indexed to inflation beginning in 2026.
This means:
- The $2,200 amount could rise over time
- The credit will better keep pace with rising costs
- Future increases will not require new legislation
For families planning ahead, this adds predictability and long-term value.
What Families Should Do Before Filing in 2026
To make sure you receive the maximum benefit available:
- File your tax return even if your income is low
- Verify Social Security numbers for all qualifying children
- Check your income and tax liability to estimate refundability
- Consider adjusting withholding if you expect a larger credit
Planning ahead can help avoid surprises and ensure you do not miss out on the increased credit.
The increase in the child tax credit to $2,200 per child marks a significant change that will affect millions of families during the 2026 tax season. While the higher maximum amount means bigger refunds or lower tax bills for many, refundability limits continue to restrict how much some families can receive.
For households that already qualified for the full credit, the update could mean hundreds of dollars more per child. For others, understanding how the refundable portion works will be critical to setting realistic expectations.
As tax season approaches, one thing is clear: the payment is coming, but how much you receive will depend on income, earnings, and tax liability. Staying informed and prepared will help families make the most of the updated child tax credit in 2026.