3 Tax Credits for Families with Children in the U.S. (2025 Updates)

Raising children in the United States can be costly, but the federal government offers powerful tax benefits to help families reduce expenses and increase their annual refunds. For tax year 2025, families may qualify for three major credits:

– Child Tax Credit (CTC)
– Child and Dependent Care Credit (CDCC)
– Earned Income Tax Credit (EITC)

In this guide, we’ll explain each credit, who qualifies, how much you can receive, and how to apply—based on the latest 2025 IRS updates.

1. Child Tax Credit (CTC) – 2025
The Child Tax Credit provides direct tax relief for families with qualifying children.

– Credit Amount (2025): Up to $2,200 per child
– Refundable Portion: Maximum $1,700 refundable if the credit is larger than your tax liability
– Eligibility:
• Child must be under 17 years old at the end of the tax year
• Both the child and at least one parent must have a valid Social Security Number (SSN)
– Income Limits (Phase-out thresholds):
• Single filers: $200,000
• Married filing jointly: $400,000

👉 How to claim: File Form 1040 each year. You can apply using the IRS Free File system or authorized tax preparation software.

Learn more: irs.gov/childtaxcredit

2. Child and Dependent Care Credit (CDCC)
This credit helps working parents cover the costs of child care.

– Expense Limit:
• Up to $3,000 for one dependent
• Up to $6,000 for two or more dependents
– Refund Rate: Between 20% and 35% of eligible expenses, depending on household income
– Eligible Expenses Include:
• Daycare, preschool, nursery school
• After-school care programs
• Babysitters or in-home care providers (must provide a valid Tax ID/EIN)
– Requirement: Both parents (if married) must be working or actively seeking employment, and expenses must be documented.

👉 How to claim: File Form 2441 along with your federal tax return. Always collect the provider’s Tax ID/EIN.

Learn more: irs.gov/carecredit

3. Earned Income Tax Credit (EITC) – 2025
The Earned Income Tax Credit is one of the most valuable credits for low- and moderate-income working families.

– Maximum Credit Amounts (2025):
• 3 or more children: $8,046
• 2 children: $7,152
• 1 child: $4,328
• No children: $649
– Investment Income Limit: $11,600 (2025)
– Requirement: Must have earned income (wages, salary, or self-employment) within IRS limits.

👉 How to claim: Complete Schedule EIC with your tax return. Families with low income can file for free using the IRS Free File program.

Learn more: irs.gov/eitc

Important Notes for 2025
– The One Big Beautiful Bill (OBBB) updated the Child Tax Credit to $2,200 per child, with annual adjustments for inflation.
– The SSN requirement may exclude millions of children without Social Security Numbers.
– Families must file a federal tax return to receive these credits, even if they owe no taxes.
– Always use the official IRS website or consult a certified tax professional for personalized advice.

Conclusion: Don’t Miss Out on Tax Benefits for Families
If you are raising children in the U.S., understanding and claiming the Child Tax Credit, Child and Dependent Care Credit, and Earned Income Tax Credit could save your family thousands of dollars each year. By filing correctly and on time, you ensure that you get the maximum benefits available in 2025.