The US provides a number of tax benefits to help families financially. L&Y Tax Advisor explains, ‘What is tax credits for families?’. It will assist you in maximizing your tax returns. It will also reduce some expenses regarding parenting.
Child Tax Credit (CTC)
Families with children under 17 can benefit greatly from the Child Tax Credit. For each eligible child, parents may claim up to $2,000 in the 2025 tax year, with up to $1,700 of that total being refundable.
This implies that a family may receive a refund up to the refundable limit even if they owe less in taxes than they owe.
For single taxpayers and joint filers, respectively, AGI must be below $200,000 and $400,000 to be eligible for the full credit. The credit phase-out occurs once certain levels are met.
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Earned Income Tax Credit (EITC)
Working families with low to moderate incomes are intended to benefit from the Earned Income Tax Credit. The following are the maximum EITC amounts for 2025:
- Three or more qualifying children: Up to $8,046
- Two qualifying children: Up to $7,152
- One qualifying child: Up to $4,328
- No qualifying children: Up to $649
The number of children and filing status affect the income thresholds for EITC claims.
- For married couples filing jointly with three or more children, an AGI of less than $68,675 is required.
- An AGI of less than $61,555 is required for single filers with the same number of children
It is crucial to remember that people cannot collect the EITC if their investment income exceeds $11,950.
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Adoption Tax Credits
The federal adoption tax credit pays for eligible adoption costs. It is available to adoptive families. The credit has increased from $16,810 in 2024 to $17,280 for the 2025 tax year.
Your tax due can be wholly eliminated with this nonrefundable credit. Any remaining balance can be carried forward for a maximum of five years.
Families with modified adjusted gross incomes (MAGI) exceeding $259,190 start to lose the benefit, and at $299,190, it stops entirely.
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State-Level Child Tax Credits
Several states also provide child tax credits, as do the federal ones. As of October 2024, 16 states had created child tax credits, and the amounts and requirements for qualifying differ greatly.
For instance, depending on income, Colorado grants up to $3,200 per kid under 16, while California offers up to $1,117 for a child under 6. Families seeking eligibility and availability should refer to their state’s tax regulations.
Energy Efficiency Tax Credits
Federal tax credits are available to families that make energy-efficient home modifications. These credits were extended through 2032 under the Inflation Reduction Act of 2022.
In 2025, households can receive:
- Up to $3,200 annually
- 30% of the renovation cost
This covers up to $1,200 for additional selected improvements and up to $2,000 for heat pump technology.
These credits offer financial advantages while promoting environmental activities.
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The Bottom Line
Families may optimize their advantages and make wise financial decisions. Knowing what is tax credits for families can help give advice based on specific situations.
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