Child Tax Credit Phase-Out: How Income Reduces Your Credit
The Child Tax Credit is reduced by $50 for each $1,000 (or fraction thereof) of modified AGI above the threshold. For single filers, the phase-out begins at $200,000. For married filing jointly, it begins at $400,000. Unlike some phase-outs that eliminate a credit entirely at a fixed point, the CTC phase-out is gradual - you keep a partial credit until your income is well above the threshold. This article shows exactly how the math works.
Phase-out basics
The phase-out thresholds for the 2026 Child Tax Credit by filing status are:
| Filing Status | Phase-Out Begins at MAGI | Elimination Point (1 child) | Elimination Point (2 children) |
|---|---|---|---|
| Single | $200,000 | $244,000 | $288,000 |
| Married Filing Jointly | $400,000 | $444,000 | $488,000 |
| Married Filing Separately | $200,000 | $244,000 | $288,000 |
| Head of Household | $200,000 | $244,000 | $288,000 |
These thresholds are set by statute (IRC Section 24) and are not adjusted for inflation each year. They apply to 2026 as they did in recent prior years.
Step-by-step mechanics
To calculate how much the phase-out reduces your CTC, follow these four steps:
- Find your excess MAGI: Subtract the phase-out threshold for your filing status from your MAGI. If the result is zero or negative, there is no reduction.
- Divide by $1,000 and round up: Divide the excess MAGI by $1,000 and round up to the next whole number. Any fraction counts as a full increment - this is the "or fraction thereof" rule. For example, excess MAGI of $10,001 rounds up to 11 increments, not 10.
- Multiply by $50: The number of increments times $50 is your credit reduction.
- Subtract from your full credit: Take the total CTC you would otherwise receive (number of qualifying children times $2,200) and subtract the reduction. The credit cannot go below zero.
The rounding rule (fraction of $1,000)
The "fraction thereof" rule is the most commonly misunderstood part of the phase-out. It means that if your excess MAGI is even $1 into a new $1,000 increment, that entire increment counts.
Examples of how rounding works for a single filer:
| Your MAGI | Excess Over $200,000 | Increments (rounded up) | Reduction |
|---|---|---|---|
| $200,000 | $0 | 0 | $0 |
| $200,001 | $1 | 1 | $50 |
| $201,000 | $1,000 | 1 | $50 |
| $201,001 | $1,001 | 2 | $100 |
| $205,500 | $5,500 | 6 | $300 |
| $210,000 | $10,000 | 10 | $500 |
Worked examples
Example 1 - Single filer, $210,000 MAGI, 2 children
- Excess MAGI: $210,000 - $200,000 = $10,000
- Divide by $1,000 and round up: 10 - no fraction, so 10 increments
- Reduction: 10 x $50 = $500
- Full credit (2 children): $4,400
- Credit after phase-out: $4,400 - $500 = $3,900
Example 2 - Married filing jointly, $440,000 MAGI, 1 child
- Excess MAGI: $440,000 - $400,000 = $40,000
- Divide by $1,000 and round up: 40 - no fraction, so 40 increments
- Reduction: 40 x $50 = $2,000
- Full credit (1 child): $2,200
- Credit after phase-out: $2,200 - $2,000 = $200
Example 3 - Single filer, $230,500 MAGI, 1 child (rounding)
- Excess MAGI: $230,500 - $200,000 = $30,500
- Divide by $1,000: 30.5 - the 0.5 fraction rounds up to 31 increments
- Reduction: 31 x $50 = $1,550
- Full credit (1 child): $2,200
- Credit after phase-out: $2,200 - $1,550 = $650
Note in Example 3 that having $30,500 in excess MAGI costs you the same reduction as having $31,000, because the fraction rounds up.
Full elimination points
The credit is fully eliminated when the reduction equals or exceeds the total credit. Since each child generates $2,200 and each $1,000 increment causes a $50 reduction, it takes 44 increments ($44,000 in excess MAGI) to eliminate the credit for one child.
| Filing Status | Children | Credit Fully Eliminated at MAGI |
|---|---|---|
| Single | 1 | $244,000 |
| Single | 2 | $288,000 |
| Single | 3 | $332,000 |
| Married Filing Jointly | 1 | $444,000 |
| Married Filing Jointly | 2 | $488,000 |
| Married Filing Jointly | 3 | $532,000 |
Having more children raises the elimination point because there is more total credit to phase out. A family with three children filing jointly still has a partial CTC at income levels where a family with one child has none.
Married filing separately
Married filing separately (MFS) filers use a phase-out threshold of $200,000 - identical to the single filer threshold, not half the MFJ amount. This is set by statute and is one of the reasons MFS is generally a disadvantageous filing status for families with children.
An MFS filer at $210,000 MAGI has the same CTC reduction as a single filer at $210,000, while their married counterpart filing jointly at $410,000 would receive the full credit with no reduction at all.
What counts as MAGI
Modified adjusted gross income (MAGI) for the CTC phase-out is your AGI (the bottom-line figure on the front of your Form 1040) with certain amounts added back. For most W-2 wage earners, MAGI equals AGI. The add-backs that apply include foreign earned income, Puerto Rico income, and U.S. possession income that was excluded from gross income.
Common items that are included in MAGI: wages, salary, self-employment income, interest, dividends, capital gains, rental income, alimony received (for pre-2019 agreements), taxable Social Security benefits, and IRA distributions. Common above-the-line deductions that reduce AGI (and therefore MAGI) include traditional IRA contributions, student loan interest, and the self-employment tax deduction.
Calculate your credit
Use the Child Tax Credit calculator to enter your MAGI, filing status, and number of qualifying children. The calculator applies the phase-out rules automatically and shows your total credit, the reduction amount, and the refundable ACTC portion.