Quick Answer
The One Big Beautiful Bill made the child tax credit fully refundable at $2,500 per child under 6 and $2,100 per child 6-17, with income phase-outs starting at $200,000 (single) or $400,000 (married filing jointly). Previously, only $1,700 was refundable.
Best Answer
Robert Kim, Tax Return Analyst
Families with household income under $200,000 who qualify for the full credit
What changed with the child tax credit in 2026?
The One Big Beautiful Bill Act made three major changes to the child tax credit starting in tax year 2026:
1. Higher credit amounts: The credit increased to $2,500 per child under age 6 and $2,100 per child ages 6-17. Previously, all qualifying children received $2,000.
2. Fully refundable: The entire credit is now refundable, meaning you can receive the full amount even if you owe no federal income tax. Under the old rules, only $1,700 per child was refundable.
3. Higher income limits: The phase-out doesn't begin until $200,000 for single filers or $400,000 for married filing jointly — double the previous thresholds.
Example: Family of four with two young children
Let's say you're married filing jointly with adjusted gross income of $85,000 and have two children ages 3 and 8.
2026 credit calculation:
Your federal income tax liability: With the standard deduction of $30,000, your taxable income is $55,000. Your federal tax is approximately $6,050.
Since your tax liability ($6,050) exceeds your credit ($4,600), you receive the full $4,600 as either a reduction in taxes owed or a refund if you've had more than $1,450 withheld from paychecks.
Under the old rules (2025 tax year):
Your 2026 benefit: $600 more in total credits, with $1,200 more potentially refundable.
Income phase-out thresholds
*Range depends on number and ages of children
Key factors that affect your credit
What you should do
If you have qualifying children, the credit is automatic when you file your 2026 tax return. However, you should:
1. Update your W-4: If you're expecting a larger refund due to the increased credit, consider reducing your withholding to get more money in each paycheck.
2. Plan for quarterly payments: Self-employed parents can reduce estimated tax payments to account for the larger credit.
3. Review your 2025 return: Use our return scanner to ensure you claimed all available credits before the new law takes effect.
[Use our refund estimator to calculate your 2026 child tax credit →]
Key takeaway: Most families will receive $500-600 more per child in 2026, with the entire amount refundable regardless of tax liability. The income limits doubled, so more high-earning families now qualify.
*Sources: [IRS Publication 972](https://www.irs.gov/pub/irs-pdf/p972.pdf), One Big Beautiful Bill Act of 2025*
Key Takeaway: Most families receive $500-600 more per child in 2026, with the entire amount refundable and income limits doubled to $200k/$400k.
Child tax credit comparison: 2025 vs 2026 rules
| Aspect | 2025 Rules | 2026 Rules (One Big Beautiful Bill) |
|---|---|---|
| Credit amount (under 6) | $2,000 | $2,500 |
| Credit amount (6-17) | $2,000 | $2,100 |
| Refundable portion | $1,700 maximum | Fully refundable |
| Income phase-out (Single) | $75,000 | $200,000 |
| Income phase-out (MFJ) | $150,000 | $400,000 |
More Perspectives
Michelle Woodard, Tax Policy Analyst
Families with income between $150,000-$500,000 who may benefit from the higher phase-out thresholds
How the higher income limits affect high earners
The doubled income phase-out thresholds are the biggest win for higher-earning families. Under the old rules, a married couple earning $240,000 received zero child tax credit. Under the new law, they receive the full amount.
Example: Married couple, $350,000 AGI, two children ages 4 and 10
Under 2025 rules: $0 credit (income too high)
Under 2026 rules: $4,600 credit ($2,500 + $2,100)
Phase-out calculation for high earners:
The credit reduces by $50 for every $1,000 of income over the threshold. For married filing jointly earning $450,000 with two children:
Strategy considerations for high earners
Timing income: If you're near the phase-out threshold, consider deferring bonuses or accelerating deductions to stay under $400,000 (MFJ).
State tax planning: The credit is federal-only. High earners in states without income tax (Texas, Florida) benefit more from the increased federal credit.
Alternative Minimum Tax: The child tax credit reduces both regular tax and AMT, making it valuable even for high earners subject to AMT.
Key takeaway: High earners previously shut out can now claim up to $4,600 in credits, with phase-outs not beginning until $400,000 for married couples.
Key Takeaway: High earners previously shut out can now claim up to $4,600 in credits, with phase-outs not beginning until $400,000 for married couples.
Robert Kim, Tax Return Analyst
Families with little or no federal tax liability who benefit most from the fully refundable nature
Why 'fully refundable' matters for low-income families
The biggest change for families with low income is that the entire child tax credit is now refundable. This means you can receive the full credit amount even if you owe no federal income tax.
Example: Single parent, $25,000 income, one child age 5
With the standard deduction of $15,000, taxable income is $10,000. Federal tax owed: approximately $1,005.
2026 credit: $2,500 (fully refundable)
Tax owed: $1,005
Refund amount: $2,500 - $1,005 = $1,495 refund
Under 2025 rules:
Your improvement: $800 more in refund ($1,495 vs $695)
Interaction with other low-income credits
Earned Income Tax Credit (EITC): The child tax credit doesn't reduce EITC. A single parent with one child earning $25,000 could receive both the full $2,500 child tax credit AND approximately $2,400 in EITC.
Additional Child Tax Credit confusion eliminated: Under the old system, the refundable portion was called the "Additional Child Tax Credit" and had complex calculation rules. Now it's simply one fully refundable credit.
Filing requirements for low-income families
Even if you don't owe taxes, you must file a return to claim the refundable credit. The IRS cannot send you money without a filed return.
Key takeaway: Low-income families see the biggest dollar increase, with an extra $500-800 per child in refundable credits compared to 2025 rules.
Key Takeaway: Low-income families see the biggest dollar increase, with an extra $500-800 per child in refundable credits compared to 2025 rules.
Sources
- IRS Publication 972 — Child Tax Credit and Credit for Other Dependents
- One Big Beautiful Bill Act — 2025 tax reform legislation
Related Questions
Reviewed by Robert Kim, Tax Return Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.