Brief Child Tax Credit Overview

Child Tax Credit Overview 

The federal government and 15 states offer child tax credits to enhance the economic security of families with children, particularly those in lower- to middle-income brackets. The amount of the tax credits is determined primarily by income level, marital status and number of dependent children. It is estimated that the federal child tax credit lifts nearly 2 million children out of poverty each year. 

Federal Child Tax Credit  

Historically, the federal child tax credit has had bipartisan support. It was established as a part of the 1997 Taxpayer Relief Act. Eligible recipients subtract the credit amount from their owed federal income taxes. Originally, the tax credit was $400 per child younger than age 17 and nonrefundable for most families. In 1998, the tax credit was increased to $500 per child younger than age 17. The tax credit amount increased again and was made refundable in 2001 to coordinate with the earned income tax credit. The refundable portion is called the additional child tax credit. 

By 2009, the income thresholds for the child tax credit and earned income tax credit no longer aligned. The American Taxpayer Relief Act of 2012 increased the value of the federal child tax credit to $1,000 and increased the income threshold to correspond with the earned income tax credit. The Tax Cuts and Jobs Act of 2017 doubled the tax credit to $2,000 and made limits to the refundable amount of up to $1,400 per child. It also introduced phase out thresholds and rates for higher-income taxpayers. The act is temporary and will expire on Dec. 31, 2025. 

The American Rescue Plan Act of 2021 temporarily expanded the child tax credit for the 2021 tax year to $3,600 per child younger than age 6 and $3,000 per child up to age 17. The size of the expanded benefit gradually diminished for single filers earning more than $75,000 per year and married couples earning more than $150,000 a year. ARPA temporarily made the tax credit fully refundable and paid half of the total credit in monthly payments for the first six months, rather than once per year. The federal child tax credit reverted to previous payment levels for the 2022 tax year. 

State-Level Child Tax Credit

Fifteen states have enacted a child tax credit in addition to the federal credit. Eleven of the 15 states (California, Colorado,Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, New York, Oregon and Vermont) have made the child tax credit refundable. California, Colorado, Idaho, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New Mexico, Utah and Vermont established a fixed limit for the tax credit ranging from $25 to $1,750 per qualifying child.

Eligibility requirements differ among states’ child tax credits. Oklahoma limits the child tax credit to families earning less than $100,000 per year. Colorado and New York have age restrictions for qualifying children (younger than age 6 in Colorado, at least age 4 in New York). Maryland's child tax credit is specifically for the lowest income families and restricts eligibility to those earning $6,000 or less per year. Maryland also restricts eligibility to families with children with disabilities. All eight states allow filers to claim both the state and federal child tax credit.

Similar to the federal child tax credit, state child tax credits are a strategy for improving family economic stability and often have bipartisan support. The COVID-19 pandemic created or compounded economic burdens for many families, and recent legislative trends suggest states are increasingly considering child tax credits.

Since 2019, 14 states (Connecticut, Hawaii, Illinois, Iowa, Kansas, Michigan, Missouri, Montana, Nebraska, New Hampshire, North Carolina, Oregon, Virginia and West Virginia) have introduced legislation to create state-level child tax credits. Connecticut previously established a one-time child tax rebate that expired in 2022. In addition to the state dependent credit, Arizona established a one-time child tax rebate which will expire in tax year 2024. Illinois passed legislation to create a state child tax credit dependent upon voter approval of a Senate Joint Resolution to provide funds. However, voters did not approve the resolution and the state’s child tax credit has not been implemented. Additionally, several states have introduced legislation to expand their current state child tax credits. 

For enacted legislation related to child tax credits, please see NCSL’s Child Tax Credits Enactments.

State Child Tax Credits as of January 2024

State	Program Name	Refundable	Tax Credit Amount	Eligibility
Arizonaa	Dependent Credit	No	$100 for dependents under the age of 17	Dependents under the age of 17
California	Young Child Tax Credit	Yes	$1,000 to each qualifying family with earnings under $25,000, reduced credit of less than $1,000 to each qualifying family with earnings between $25,000 to $30,000	Only available for children under age 6 and must qualify for the California Earned Income Tax Credit
Coloradob	Child Tax Credit	Yes	Up to $1,200 per qualifying child (depends on income and filing status)	Only available for children under the age of 6
Idaho	Child Tax Credit	No	$205 per qualifying child	Qualifying child is defined by section 24(c) of the Internal Revenue Code
Mainec	Dependent Exemption Tax Credit	Yes	$300 per qualifying child and dependent	Dependent must be under the age of 17
Maryland	Child Tax Credit	Yes	$500 per child	Child under the age of 17 must have a disability and taxpayers federal adjusted gross income must be $6,000 or less
Massachusettsd	Household Dependent Tax Credit	Yes	$180 for one dependent, $360 for 2 or more dependent	"Dependents" are considered children under 12 years old, adults 65 or older, and anyone with a disability
Minnesota	Child Tax Credit	Yes	$1,750 per qualifying child	The credit phases out for individual income over $29,500 and $35,000 for taxpayers filing jointly.
New Jerseye	Child Tax Credit	Yes	$500 per child under the age of 6 for qualified taxpayers with income no greater than $30,000	The credit is phased out by $100 for different income brackets.
New Mexico	Child Income Tax Credit	Yes	$75 to $175 per qualifying child, depending on income	Any minor child or stepchild of the taxpayer who would be a qualifying child for federal income tax purposes
New Yorkf	Empire State Child Tax Credit	Yes	The greater of: 33% of the portion of the federal child tax credit and federal additional child tax credit attributable to qualifying children OR $100 multiplied by the number of qualifying children	Child must be at least age 4 and must qualify for the federal child tax credit
Oklahomag	Child Tax Credit	No	5% of federal credit	Taxpayers federal adjusted gross income cannot exceed $100,000 for married couples filing jointly
Oregonh	Child Tax Credit	Yes	$1,000 per child under the age of 5	Families earning more than $30,000 are ineligible
Utah	Child Tax Credit	No	$1,000 per child between the ages of 1 and 4 years old.	Decreases by $10 for every $1 in income that exceeds a certain income threshold depending on filing status
Vermonti	Child Tax Credit	Yes	$1,000 per child under the age of 5	Taxpayers must have income below $125,000.

Notes:

a—Arizona: Taxpayers with dependents above the age of 17 are also eligible to receive an additional $25 per dependent. For example, for taxpayers caring for family members with disabilities or healthcare needs. 

b—Colorado: The tax credit for individual taxpayers with income less than $25,000 is $1,200. The credit is $600 for taxpayers with income between $25,000 and $50,000 and $200 for taxpayers with income between $50,000 and $75,000. 

c—Maine: Prorated for non-resident and part-year resident taxpayers. State statute specifies the dependent exemption tax credit to be used as a tax credit. 

d—Massachusetts: The state also offers a refundable Dependent Care Tax Credit for expenses, but taxpayers can only choose the Dependent Care Tax Credit or the Household Dependent Tax Credit, not both. 

e—New Jersey: For taxpayers with income between $30,000 and $40,000 the credit is $400 per child. For taxpayers with income between $40,000 and $50,000 the credit is $300 per child. For taxpayers with income between $50,000 and $60,000 the credit is $200 per child. For taxpayers with income between $60,000 and $80,000 the credit is $100 per child. 

f—New York: Tax filers with qualifying children and incomes under $110,000 for married couples and $75,000 for singles, who did not claim the federal child tax credit but meet all other eligibility requirements shown above, receive a credit of $100 multiplied by the number of qualifying children. 

g—Oklahoma: Filers can choose between this or another option, 20% of the credit for childcare expenses allowed under the Internal Revenue Code of the United States or 5% of the child tax credit allowed under the Internal Revenue Code, whichever amount is greater. 

h—Oregon: Families earning less than $25,000 are eligible for the full credit which is reduced until it is fully phased out for families earning more than $30,000. 

i—Vermont: The tax credit will phase out at a rate of $20 per every $1,000 earned over the $125,000 threshold. 

Source: StateNet bill tracking current as of January 2024.