Weekly OBBBA Spotlight, Week 2: Expanded Child Tax Credit & Other Dependent Credit for 2025

Jan 13
2 min read

OBBBA’s Child Tax Credit: Bigger, Broader, but Stricter

The One Big, Beautiful Bill Act (OBBBA) permanently extends and enhances the Child Tax Credit (CTC) and Other Dependent Credit—two of the most valuable tax breaks for families. Here’s what’s new for 2025 and what you need to know for your tax planning:

Key Child Tax Credit Changes for 2025

Credit Amount: The CTC is now $2,200 per qualifying child (up from $2,000 in prior years), and is indexed for inflation in future years.
Refundability: A portion of the credit remains refundable, meaning eligible families can receive part of the credit even if their tax liability is zero.
Stricter Documentation: Both the taxpayer and each qualifying child must have a valid Social Security number (SSN) to claim the credit. This is a stricter requirement than prior law.
Age Limit: The qualifying child must be under age 17 at the end of the tax year (unchanged).
Phaseout Thresholds: The credit begins to phase out at $400,000 of modified adjusted gross income (MAGI) for joint filers ($200,000 for single filers), with thresholds indexed for inflation.
Permanent: The CTC enhancements are now permanent—no more “sunset” worries.

Other Dependent Credit

Credit Amount: The $500 nonrefundable credit for other dependents (such as college-age children, elderly parents, or other qualifying relatives) is also permanent under OBBBA.
Eligibility: The dependent must be a U.S. citizen, national, or resident alien, and cannot be claimed for the CTC.

Planning Tips & Compliance Reminders

Verify Social Security Numbers: Ensure both you (the taxpayer) and each dependent have valid SSNs before filing. The IRS will deny the credit if these are missing or incorrect.
Track Income: If your income is close to the phaseout thresholds, consider strategies to manage your AGI for maximum credit eligibility.
Claiming Dependents: Review who qualifies as your dependent—rules differ for the CTC and Other Dependent Credit. Check residency, age, and relationship requirements.
Partial Refundability: Even families with little or no tax liability may benefit from the refundable portion. Make sure your filing status and earned income are reported accurately.

What’s Next?

Stay tuned for next week’s post, where we’ll break down the increased State and Local Tax (SALT) deduction cap, the Pease limitation repeal, and what these mean for itemizers in 2025.

For questions about your credits or help gathering documentation, log into our secure client portal or contact us at contact@seiberlingandcompany.com.