Introduction
For families across the United States, the Child Tax Credit (CTC) has long been a vital tool for reducing tax liability. In Donald Trump’s 2025 tax proposal, the credit sees a significant boost increasing from $2,000 to $3,500 per qualifying child. For working parents, this could result in thousands of dollars in tax savings.
In this blog, we explain the changes to the CTC in the 2025 proposal, relevant IRS code sections, eligibility rules, calculation examples, compliance steps, and how to ensure you claim the full benefit.
Key Changes to the Child Tax Credit (IRC Reference)
- IRC §24 – This section governs the Child Tax Credit. Under the proposed 2025 Trump bill:
- The credit increases to $3,500 per child under age 17
- Phase-out thresholds may be revised, likely increasing eligibility for more middle-income families
- Additional Refundable Credit may also be expanded (formerly $1,600 of $2,000 credit was refundable)
Who Qualifies for the Expanded Child Tax Credit?
To claim the CTC in 2025, you must meet the following:
- The child must be under age 17 at the end of the tax year
- The child must be your dependent and claimed on your tax return
- The child must have a valid SSN
- You must meet income eligibility thresholds, proposed to increase beyond the 2024 phaseouts of:
- $200,000 for Single
- $400,000 for Married Filing Jointly
IRS Forms to Use
- Form 1040 – Primary income tax return where CTC is claimed
- Schedule 8812 – To calculate the Additional Child Tax Credit (refundable portion)
- Form W-4 – May need to be updated for accurate withholding after the credit increase
Example Scenario
Case: Anjali and Raj, Married Filing Jointly, 2 children under 17
- Income: $160,000
- 2024 Child Tax Credit: 2 × $2,000 = $4,000
- 2025 Proposed Credit: 2 × $3,500 = $7,000
- Increase in credit: $3,000 more saved in taxes
If they owe $10,000 in taxes, their new CTC reduces liability to just $3,000 a 30% tax cut for their household.
Step-by-Step IRS Compliance Guide
- Check Dependent Eligibility – Confirm age, relationship, residency, and SSN of your child.
- Use Form 8812 – Determine refundable portion if your tax liability is lower than the credit.
- Update Form W-4 – Lower tax withholding may be appropriate based on higher credits.
- Coordinate With Other Benefits – Ensure CTC doesn’t conflict with EITC or child care credits.
- File Electronically and On Time – Use current-year IRS forms and ensure your dependent info is correct.
- Consult a Tax Advisor – Ensure you’re maximizing both refundable and non-refundable portions of the credit.
Conclusion
Trump’s 2025 tax bill proposes a 75% increase in the Child Tax Credit, providing meaningful relief for families. If enacted, this expansion could reduce your tax bill significantly but only if you prepare in advance, ensure compliance, and file accurately.
Call to Action
Are you claiming the full Child Tax Credit your family deserves?
With proposed changes expanding both the value and reach of this credit, now is the time to optimize your tax filing.
Book your session today to secure your refund and lower your tax bill:
Schedule a meeting with Anshul Goyal, CPA, EA, FCA
About Our CPA
Anshul Goyal, CPA, EA, FCA, is a U.S.-licensed Certified Public Accountant and IRS Enrolled Agent. He specializes in federal tax compliance, child and dependent-related credits, and international tax matters involving Indian residents in the U.S. He brings over a decade of expertise to both individual and business taxpayers.
Disclaimer
This blog is for educational purposes only and does not constitute legal, financial, or tax advice. Every family’s tax profile is different. Please consult with a licensed professional before acting on the information provided.