The Child Tax Credit (CTC) and Refundable Child Tax Credit (RCTC) provide support for up to 48 million qualifying Americans across the nation with children. The combined effect of these two tax benefits can see their benefits be nearly doubled if both are deployed. They are both designed to provide financial relief to families with children, however they do differ in how they can benefit taxpayers, particularly those with lower incomes.
The difference between the CTC and the RCTC
The Child Tax Credit is a tax benefit available to parents and guardians of children under the age of 17. The purpose of the credit is to reduce the amount of taxes owed by the taxpayer. For the 2024/2025 fiscal year, the child tax credit is worth $2,000 per qualifying dependent child for qualifying families. An important distinction between the CTC and the RCTC is that the CTC is non-refundable, which means it can only reduce the amount of taxes owed. If your tax liability is less than the credit, the remainder of the credit is lost—you don’t get the remaining amount as a refund.
The Refundable Child Tax Credit (sometimes referred to as the Additional Child Tax Credit in previous years) is a portion of the Child Tax Credit that can result in a refund if the taxpayer has little or no tax liability. This payment is refundable, unlike the CTC, and stipulates for the 2024/2025 fiscal year that $1,700 of the $2,000 from the CTC can be refunded.
To illustrate this, suppose a family owes $1,500 in taxes, the non-refundable portion (up to $1,500) of the credit will reduce their tax liability to $0. However, there would still be $500 remaining from the $2,000 CTC, but because the CTC is non-refundable, they will lose this remaining $500. If the family qualifies for the Refundable Child Tax Credit (RCTC) portion (up to $1,700), and their tax liability is $0, they could receive the remaining $500 as a refund (since they owe no taxes). The Refundable Child Tax Credit allows them to get a refund for the portion of the credit that exceeds their tax liability.
Qualification criteria for the CTC
For the 2025/2026 fiscal year, the following criteria must be met in order to qualify to receive the CTC:
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Age: Your child must have been under the age of 17 at the end of the 2025/2026 tax year.
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Relationship: The child you’re claiming must be your son, daughter, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister or a descendant of any of those people (e.g., a grandchild, niece or nephew).
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Dependent status: You must be able to properly claim the child as a dependent.
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Residency: The child you’re claiming must have lived with you for at least half the year
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Financial support: If your qualified child financially supported themselves for more than six months, they’re not qualified for the CTC.
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Citizenship: Your child must be a “U.S. citizen, U.S. national or U.S. resident alien,” and must hold a valid Social Security number.
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Income: Parents or caregivers claiming the CTC cannot exceed an annual income of $200,000 or $400,000 for married couples filing jointly.
How to claim your CTC
If you and your child met the above qualifying criteria, you can claim your CTC on your 2025 tax return for the 2024 year. The CTC provides significant benefits for families and is a cornerstone of government assistance for low- and middle-income households. Qualifying individuals can expect to receive their CTC and TCTC by mid-February of next year. It is important to also take note of state-specific child tax credits which may be offered in your state in addition to the federal CTC and RCTC. Make sure to always stay updated through official government channels when it comes to receiving accurate updates on tax credits.
