There were some changes made to the child tax credit rules in the new tax bill. The amount of the credit was increased, the adjusted gross income phase-outs were increased, a new non-child dependent tax credit was added, and limits were added to the refundable portion of the tax credit. The changes are summarized in the below table.
| Old Law | New Law | |
|---|---|---|
| Qualifying Child Tax Credit | $1,000 per child UNDER age 17 | $2,000 per child UNDER age 17 |
| Qualifying Dependent Tax Credit | N/A | A $500 nonrefundable tax credit is added for qualifying dependents other than qualifying children |
| AGI Phase-Outs | The child tax credit is reduced $50 for each $1,000 of modified gross income (AGI) over $75,000 for single individuals or heads of households, $110,000 for married individuals filing jointly, and $55,000 for married individuals filing separately. | The child tax credit is reduced by $50 for each $1,000 of modified gross income (AGI) in excess of $400,000 for married individuals filing jointly, and $200,000 for all other taxpayers. The phase-outs are not indexed for inflation. |
| Refundable Credit | If the child tax credit exceeds the taxpayer’s tax liability, the taxpayer is eligible for a refundable credit (also known as the “additional child tax credit”) equal to 15% of earned income in excess of $3,000 (the “earned income” formula).
The maximum refundable tax credit cannot exceed $1,000. |
Same as the old law, except the additional child tax credit is equal to 15% of earned income in excess of $2,500 instead of $3,000.
The maximum refundable tax credit cannot exceed $1,400. This amount will be indexed for inflation in increments of $100. |
| Alternative Formula | Families with three or more children may determine the additional tax credit using the alternative formula if it results in a larger credit under the earned income formula. Under this formula, the additional child tax credit equals the amount by which the taxpayer’s Social Security taxes exceeds the taxpayer’s earned income credit. | Same as old law |
| Social Security Numbers | No credit will be allowed unless the taxpayer includes the name and Social Security number of the qualifying child on the taxpayer’s tax return. The Social Security number must be issued on or before the filing due date (including extensions) of the taxpayer’s return. | There is still a Social Security number requirement for the qualifying child tax credit, but there is not a Social Security number requirement for the $500 non-child dependent tax credit. If a qualifying child does not have a Social Security number, they are still eligible for the $500 non-child dependent credit. |