The next few years will be very important for the Child Tax Credit (CTC). In the new year, the law will change and the CTC will grow in important ways for parents who qualify. The CTC is a government program that helps low-income families with children who depend on them financially. The goal is to reduce poverty and help pay for the costs of raising children.
The Child Tax Credit expansion is set to expire in 2026
When the Biden administration announced the American Rescue Plan during the COVID-19 pandemic, they did so to help millions of Americans right away. The Child Tax Credit (CTC) was changed so that children as young as 17 could get credit under the policy, instead of just 16 years old as before. The expansion will end in 2026, though, unless Congress votes to keep it going.
It is not clear how likely it is that the expansion will continue, but it is clear that it had big effects. A study by Columbia University’s Center on Poverty and Social Policy found that the payments reached almost 61 million children and lowered the number of children living in poverty each month since the expansion was made in 2021.
Along with the expansion, other states have added more CTC for their residents, which is another big step forward for the CTC. The CTC is a federal program, but states have made their own CTC programs to help low-income and vulnerable families with children because they know other programs are not working.
States introduce their own CTC
As part of the federal CTC program, families that qualify can get tax rebates of up to $2,000 per child. Of this amount, $1,600 is refundable and the remaining $400 is non-refundable. In other words, you can get $1,600 back in tax rebates even if you do not owe that much in taxes. You can only use the last $400 to lower your taxes.
It was set at $2,000 during the COVID-19 pandemic. Before that, it was set at $1,000 for kids younger than sixteen. If Congress does not keep extending the expansion, the CTC will go back to its original amount and kids younger than 17 will no longer be eligible.
This possible change could have a big effect on families with older children, especially those who depend on the larger credit to meet their financial needs.
Because the CTC expansion worked so well, 16 states have decided to start their own CTC programs. The Child Tax Credit may go back to its original rules, but parents in the following states can still get payments at the state level as long as they meet the requirements:
- Arizona
- California
- Colorado
- Idaho
- Illinois
- Maine
- Maryland
- Massachusetts
- Minnesota
- New Jersey
- New Mexico
- New York
- Oklahoma
- Oregon
- Utah
- Vermont
Which states are offering the highest amount of credit?
The CTC program in each state has different rules about who can apply and how much each child can get paid. At the top of the range is Colorado, which offers up to $3,200 per child depending on your family’s income.
Minnesota has a big rebate: $1,750 per child for single filers making $29,500 or less, or $35,000 for joint filers. Oregon, Utah, and Vermont are some of the other states that offer more than $1,000 per child.
Tim Walz, the governor of Minnesota, just recently said that taxpayers can get their CTC payment early. You will get both your 2025 and 2026 CTC payments next year if you live in the state and choose this option. In the second half of 2025, the advance will be paid out in parts.
“The goal of this nation-leading tax credit is to lessen child poverty and help Minnesota working-class families pay their taxes,” Walz said. “We are making it easier for families to plan their annual budget by giving them the option to pay in advance.” This new choice will give people more financial freedom and make sure that families get the help they need all year.
