Written by Kathryn Carrere, Accountant
As tax law continues to evolve, Darnall, Sikes & Frederick wants to help you understand the changes introduced by the One Big Beautiful Bill Act (OBBBA) and how they may affect your tax treatment. Enacted on July 4, 2025, this major U.S. tax law enhanced several existing tax credits and introduced new tax benefits for American taxpayers. The purpose of this article is to provide clarity on the child tax credit change.
One provision included in the OBBBA is Section 70104, which extends and enhances the Child Tax Credit. This provision permanently increases the maximum credit available to taxpayers with qualifying children, raising the non-refundable portion to $2,200 per child and the refundable portion to $1,700. In simple terms, eligible families can reduce the amount of taxes they owe, and some may even receive a part of the credit as a refund if they owe little to no taxes. The provision also maintains income phase-out thresholds of $200,000 for single filers and $400,000 for married couples filing jointly, allowing many middle-income families to benefit. This tax change primarily impacts individual taxpayers and families with dependent children. (Source: Senate)
The enhanced Child Tax Credit provides financial benefit for eligible families by reducing their tax liability for each qualifying child. For example, a family with two qualifying children could receive up to $4,400 in total tax credits, which will significantly reduce their federal income tax liability. Additionally, since this credit has a refundable portion, some taxpayers may receive a refund from this benefit. (Source: IRS Refundable Portion)
To take advantage of this provision, taxpayers should ensure they meet all eligibility requirements, including Social Security numbers for both the taxpayer and qualifying child. Families should keep in mind the income phase-out thresholds of $200,000 for single filers and $400,000 for married filing jointly, to ensure they receive the correct amount of the tax credit. This provision creates an opportunity for families to lower their tax liability, but taxpayers who fail to meet the documentation requirements and income limitations may receive a reduced credit or be denied the benefit. (Source: IRS CTC)
Taxpayers who believe they may qualify for the enhanced Child Tax Credit should review their eligibility and consult their tax advisor. To claim the credit, both the taxpayer and qualifying child must have eligible Social Security numbers, proving they are a U.S. citizen. Families should ensure that all required documentation is accurate and up to date before filing their tax return. Contact our office today to discuss your situation and learn how this provision may benefit your family.
Staying informed about current tax law is important, as changes may create valuable tax benefits. If you have any questions or concerns about how these updates may affect you, please reach out. Thank you for trusting Darnall, Sikes & Frederick.
References
(Source: Senate) https://www.finance.senate.gov/imo/media/doc/finance_committee_section-by-section_title_vii5.pdf
(Source: IRS Refundable Portion) https://www.irs.gov/credits-deductions/individuals/refundable-tax-credits
(Source: IRS CTC) https://www.irs.gov/credits-deductions/individuals/child-tax-credit