Additional Child Tax Credit (ACTC) — The Refundable Portion Explained
Most tax credits only help if you actually owe taxes. The Additional Child Tax Credit is different — it puts money in your pocket even when your tax bill is already zero. For families with lower incomes, this is often the bigger benefit.
Estimate your refundable credit with the Child Tax Credit Calculator.
How the ACTC Works
The Child Tax Credit is worth up to $2,000 per child, but it's nonrefundable — it can reduce your tax to $0, not below. Whatever's left over becomes the ACTC, which IS refundable, up to $1,700 per child for 2026.
Quick example:
| Item | Amount |
|---|---|
| Federal tax owed (before credits) | $800 |
| Child Tax Credit (1 child) | $2,000 |
| CTC used against tax | −$800 |
| Remaining CTC | $1,200 |
| ACTC (refundable, max $1,700) | $1,200 refund |
You owed $800 in tax, used $800 of CTC to zero it out, then got the remaining $1,200 as a cash refund through the ACTC.
ACTC Calculation Formula
The ACTC uses a formula based on your earned income:
- Take your earned income above $2,500
- Multiply by 15%
- That's your maximum ACTC (capped at $1,700 per child)
Example — Single parent, 2 children, $25,000 earned income:
- Earned income above $2,500: $25,000 − $2,500 = $22,500
- 15% of $22,500 = $3,375
- Cap: $1,700 × 2 children = $3,400
- ACTC: $3,375 (limited by the formula, not the cap)
| Earned Income | ACTC per Child (max) |
|---|---|
| $2,500 or less | $0 |
| $10,000 | $1,125 (1 child) |
| $15,000 | $1,700 (1 child — hits cap) |
| $25,000 | $1,688 each (2 children) |
Who Benefits Most From the ACTC?
The ACTC matters most for families whose income is too low to owe much federal tax:
-
Minimum wage workers — A full-time worker at $15/hour earns ~$31,200. Their federal tax liability might be under $1,000 after the standard deduction, making most of their CTC refundable through ACTC.
-
Single parents — Head of household filers get a larger standard deduction ($22,000), which often means little or no tax owed.
-
Large families — With 3+ children, the total CTC ($6,000+) almost always exceeds the tax liability, leaving a large refundable portion.
ACTC vs. EITC — Can You Get Both?
Yes. The ACTC and Earned Income Tax Credit are completely separate. A qualifying family can receive both in the same year:
| Credit | Type | Max Amount |
|---|---|---|
| ACTC | Refundable (partial CTC) | $1,700/child |
| EITC | Refundable | $7,830 (3+ children) |
| Combined | Up to $12,930+ |
Both are claimed on the same tax return. The IRS calculates them independently.
How to Claim the ACTC
You don't file a separate form. When you claim the Child Tax Credit on your 1040, the IRS (or your tax software) automatically calculates the ACTC using Schedule 8812.
The key lines:
- Total CTC calculated
- Minus tax liability applied
- Remaining amount → ACTC (up to $1,700/child)
If you file with TurboTax, H&R Block, or any major software, this happens automatically. Just make sure you enter all qualifying children.
Important: ACTC refunds are delayed by law. The IRS cannot issue refunds for returns claiming ACTC or EITC before mid-February, even if you file on January 1st.
Use the Federal Tax Calculator to estimate your total tax liability and see how much of your CTC becomes refundable.
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