What Is the Additional Child Tax Credit?

What Is the Additional Child Tax Credit?

Let me explain the Additional Child Tax Credit (ACTC) directly: it's the refundable part of the Child Tax Credit that you can claim if you qualify, potentially turning unused credit into a cash refund.

You know how the Child Tax Credit reduces what you owe the IRS, but any leftover amount just disappears because it's not refundable? That's where the ACTC steps in—it lets you get at least some of that excess back as a refund.

How the Additional Child Tax Credit Works

If you qualify for the ACTC and claim it, you can receive part of your Child Tax Credit as a refund—it's that straightforward, but you need to complete Schedule 8812 and attach it to your Form 1040.

Keep in mind the limits: for 2024 and 2025, only up to $1,700 of unused Child Tax Credit per child transfers to the refundable ACTC, which is 85% of the $2,000 maximum Child Tax Credit. If you have three children, that could add up to $5,100.

Income limits apply here too—the $2,000 and $1,700 amounts start phasing out at adjusted gross incomes of $200,000 for single filers or $400,000 for married filing jointly. Also, you can't claim the ACTC if you're excluding foreign-earned income with Form 2555.

Legislative Changes

The Child Tax Credit started with the Taxpayer Relief Act in 1997, and the refundable ACTC was added in 2001 via the Economic Growth and Tax Relief Reconciliation Act—it was meant to be temporary, but it's stuck around.

In 2017, the Tax Cuts and Jobs Act boosted the Child Tax Credit from $1,000 to $2,000 and raised the income thresholds to $200,000 and $400,000, which remain in effect through 2025.

As of February 2025, the IRS updated rules so Puerto Rican residents can qualify for the ACTC with just one qualifying child instead of three, and refunds including the ACTC won't be issued before mid-February under current law.

Is Your Family Eligible?

Eligibility for the ACTC hinges on first qualifying for the Child Tax Credit and having leftover credit after wiping out your tax bill—several factors about your dependent child determine this.

The child can't be older than 16 by the end of the tax year, must be a U.S. citizen, national, or resident alien with a Social Security number, and you have to claim them as a dependent on your return. They need to have lived with you for more than half the year, not provided over half their own support, and be related to you—stepchildren count too.

Make sure their SSN is valid for employment and issued before your tax return due date; if you extend filing to October, that deadline applies.

The Bottom Line

For high earners above the $200,000 or $400,000 phaseout limits, the ACTC won't offer much help, but it can provide a solid financial lift for other families, especially those with multiple children.

These two credits together cut your tax bill and might put some cash back in your pocket—the rules aren't overly complicated, so if you have qualifying dependents, don't skip claiming them at tax time.