The Child Tax Credit in 2026

The Child Tax Credit is $2,200 per qualifying child for 2026, with up to $1,700 refundable. The One Big Beautiful Bill Act made the credit permanent and indexed it for inflation, ending the cycle of temporary extensions that had made planning difficult.

OBBBA also tightened identification requirements in a way that disqualifies families who previously qualified — a change that has caught mixed-status households in particular, and that is now generating disputes rather than planning questions.

We advise families on eligibility, disallowance disputes, and dependency conflicts throughout Temecula, Murrieta, San Diego, Riverside, and San Bernardino.

Who Is a Qualifying Child

Six tests, all of which must be met:

• Age — under 17 at the end of the tax year. The credit ends the year a child turns 17, which surprises parents annually.
• Relationship — son, daughter, stepchild, foster child, sibling, step-sibling, or a descendant of any of these
• Support — the child did not provide more than half of their own support
• Residency — lived with you more than half the year
• Dependency — properly claimed as your dependent
• Citizenship — U.S. citizen, national, or resident alien

The Identification Requirement

The child must have a Social Security number valid for employment, issued before the return’s due date including extensions. An ITIN does not qualify a child for the Child Tax Credit — though a child with an ITIN may still qualify for the $500 Credit for Other Dependents.

OBBBA added a requirement at the taxpayer level as well: at least one filer on the return must have a valid Social Security number. For married couples filing jointly where only one spouse has an SSN, this is a meaningful change, and it has produced disallowances for families who claimed the credit without issue in prior years.

Income Phaseout

The credit phases out at $5 for every $1,000 of modified AGI above:

• $200,000 — single, head of household, married filing separately
• $400,000 — married filing jointly

These thresholds are not indexed for inflation, so the credit reaches fewer families in real terms each year even as the credit amount itself is indexed. Because the phaseout is gradual, a family slightly over the threshold retains most of the credit — worth calculating rather than assuming it is lost entirely.

The Refundable Portion

Up to $1,700 per child is refundable as the Additional Child Tax Credit, but it is not automatic. The refundable amount is limited to 15% of earned income above $2,500.

A family with $10,000 of earned income can access at most 15% of $7,500 — $1,125 — regardless of how many children they have. Families with very low or no earned income receive little or no refundable credit, which is the structural feature that draws most of the policy debate about the credit.

Related Credits

Credit for Other Dependents — $500 nonrefundable for dependents who do not qualify for the Child Tax Credit: children 17 and older, elderly parents, and dependents with ITINs.

Child and Dependent Care Credit — a percentage of care expenses that enable you to work, on up to $3,000 of expenses for one qualifying person or $6,000 for two or more. It requires the care provider’s taxpayer identification number, which means informal cash arrangements generally cannot support a claim.

Earned Income Tax Credit — fully refundable and substantially larger for families with children. It is also the most examined credit in the Code.

California’s Credits

California does not mirror the federal Child Tax Credit, but it offers credits with no federal counterpart:

• CalEITC — California’s earned income credit, available at lower income levels and to some filers with ITINs who cannot claim the federal EITC
• Young Child Tax Credit — for CalEITC-eligible families with a child under six
• Foster Youth Tax Credit — for eligible former foster youth
• California Child and Dependent Care Expenses Credit — a percentage of the federal credit, subject to California income limits

The ITIN eligibility point matters in Southern California. A family excluded from the federal credit by the SSN requirement may still qualify for CalEITC and the Young Child Tax Credit — a distinction that is frequently missed and that can be worth a meaningful refund.

When Two People Claim the Same Child

Duplicate claims are common after separation and divorce, and the IRS resolves them mechanically.

The custodial parent — the one with whom the child lived the greater number of nights — is entitled to claim the child. A divorce decree assigning the exemption to the other parent does not bind the IRS. The custodial parent must release the claim on Form 8332, signed and attached to the noncustodial parent’s return.

This is the single most common source of dependency disputes we see. A parent relying on a family court order without a signed Form 8332 will lose the claim at the IRS regardless of what the order says, and the remedy is in family court, not tax court.

Where both parents claim the child, the second return filed is rejected electronically and both parties receive correspondence. Tiebreaker rules then apply: the parent with whom the child lived longer prevails, and if nights were equal, the parent with higher AGI.

Disallowance and Its Consequences

Credit claims are verified against Social Security records, prior-year filings, and information returns. Discrepancies generate correspondence audits — often months after the refund was issued and spent.

The consequences escalate. A claim disallowed for reckless or intentional disregard of the rules bars the taxpayer from claiming that credit for two years; disallowance for fraud imposes a ten-year ban. After any disallowance, Form 8862 is generally required to claim the credit in a later year.

The defensible position rests on records that establish residency and support: school and medical records showing the child’s address, lease or mortgage documents, childcare provider statements, and benefit records. Assembling these before responding to a notice is considerably more effective than reconstructing them afterward. See IRS audits and IRS notices.

Documenting Residency and Support

Nearly every Child Tax Credit examination comes down to one of two tests — whether the child lived with you more than half the year, and whether the child provided more than half of their own support. Both are provable, but only with records that establish the facts independently.

What works for residency: school enrollment and attendance records listing your address, medical and dental records, childcare provider statements, a lease or mortgage showing the household composition, and correspondence from social service agencies. Records covering multiple months across the year are more persuasive than a single document.

What works for support: evidence of who paid for housing, food, clothing, education, and medical care. This matters most for older teenagers with jobs and for children in multigenerational households, where the IRS may question whether the child or another relative provided the majority of support.

A signed statement from a relative is weak evidence on its own. Contemporaneous third-party records — the school, the doctor, the landlord — carry the weight, and they are far easier to obtain before responding to a notice than after an appeal has already been filed.

For separated parents, the practical protection is to count nights rather than rely on an assumption. The custodial parent test is mechanical, and a parent who believes they had the child “most of the time” without a record is in a weak position when the other parent produces a calendar.

Frequently Asked Questions

How much is the Child Tax Credit for 2026?

$2,200 per qualifying child, with up to $1,700 refundable. The credit is now permanent and indexed for inflation.

My child has an ITIN. Can I claim the credit?

Not the Child Tax Credit — the child needs an SSN valid for employment. The $500 Credit for Other Dependents may be available, and California’s CalEITC and Young Child Tax Credit may apply.

At what income does the credit phase out?

It begins reducing above $200,000 of modified AGI, or $400,000 for joint filers, at $5 per $1,000. The thresholds are not inflation-indexed.

My child turned 17 this year. Do I still get the credit?

No. The child must be under 17 at year end. The $500 Credit for Other Dependents may apply instead.

My divorce decree says I claim our child, but my ex claimed her first. What now?

The IRS follows the custodial parent rule and Form 8332, not the decree. Without a signed release, the custodial parent prevails at the IRS; enforcement of the decree is a family court matter.

Why is my refund delayed?

Refunds on returns claiming the refundable Child Tax Credit or EITC are held by statute until mid-February, and identity verification can extend that.

Does California have a child tax credit?

Not a direct equivalent, but the CalEITC, Young Child Tax Credit, Foster Youth Tax Credit, and a state child and dependent care credit are available, some to ITIN filers excluded federally.

If a Claim Has Been Questioned

Most child credit problems arrive as a notice proposing to disallow a credit already refunded, and they are more winnable than they look — provided the residency and support records are assembled properly and the response addresses the specific test the IRS is questioning.

Pietro Canestrelli holds an LL.M. in Taxation and represents taxpayers in credit disallowance disputes, dependency conflicts, and correspondence examinations. Schedule a consultation, or review our tax credits overview.