A number of federal tax credit programs are designed specifically for workers with children and dependents. The goal of these programs is to help workers maintain employment by offsetting the costs related to caring for children and dependents. This section includes general information about tax credits for families, as well as specific information about the Child Tax Credit, the Child and Dependent Care Tax Credit, and the Adoption Tax Credit. In addition, this section explores credits available for those investing in their education and health.
Child Tax Credit Changes Starting in Tax Year 2018
- Starting in tax year 2018, the CTC is worth up to $2,000 (up to $1,400 is refundable). It is available to workers earning more than $2,500.
- Children claimed for the CTC must have a social security number (SSN) that authorizes work. A tax filer and spouse (if present) can still have an SSN or an Individual Taxpayer Identification Number (ITIN).
- Children should be considered a dependent for tax filing purposes.
- A new credit for dependents is available. A $500 non-refundable credit is available for families with qualifying relatives. This benefits people who previously would claim an exemption for a dependent relative.
These changes are part of the Tax Cuts and Jobs Act of 2017 and are set to expire in 2026. After this time, CTC eligibility rules will revert to previous requirements. For more information, see the Center on Budget and Policy Priorities' What is the Child Tax Credit? page. Other key changes include:
- Exemptions are eliminated. Personal and dependent exemptions are no longer part of the tax filing process. The standard deduction has nearly doubled which generally offsets the benefit of claiming these exemptions. This isn’t a critical change, but it provides some context for the credit for dependents that is part of the CTC.
- Health coverage penalty eliminated. People will no longer be charged a penalty if they did not have health insurance.
- Refund delays continue. The PATH Act of 2015 includes a provision that tax refunds that include the EITC or refundable CTC cannot be issued to a taxpayer before February 15 to allow the IRS time to verify income reported. This provision will continue. See CBPP's page on refund delays for more information.