Is the Child Tax Credit Refundable in 2026?
Partially. The 2026 Child Tax Credit is $2,200 per child, of which up to $1,700 is refundable as the Additional Child Tax Credit (ACTC). The remaining $500 is non-refundable: it can reduce your tax to zero but cannot generate a refund on its own.
Refundable vs. non-refundable explained
Tax credits come in two types. A non-refundable credit can reduce your tax liability to zero, but any leftover credit disappears. If your tax is $800 and you have a $1,200 non-refundable credit, your tax goes to zero but you do not get the extra $400 back.
A refundable credit can reduce your tax below zero, paying out as a cash refund. If your tax is $800 and you have a $1,200 refundable credit, your tax goes to zero and you receive a $400 refund.
The Child Tax Credit has both types built in. The $500non-refundable portion works first, reducing your tax bill. If you still have eligible credit remaining after your tax reaches zero, up to $1,700per child can be refundable through the ACTC.
How the ACTC refundable portion works
The Additional Child Tax Credit is calculated on Schedule 8812 (attached to your Form 1040). The refundable amount equals 15% of your earned income above $2,500, capped at $1,700 per qualifying child.
The formula:
ACTC = min( 15% x (earned income - $2,500), $1,700 per child )
Earned income for this purpose includes wages, salaries, tips, and net self-employment income. It does not include investment income, Social Security, unemployment benefits, or pension distributions.
Examples of how earned income affects the ACTC for one qualifying child:
| Earned Income | Earned Income Above $2,500 | 15% of Excess | ACTC (1 child, capped at $1,700) |
|---|---|---|---|
| $0 | $0 | $0 | $0 |
| $10,000 | $7,500 | $1,125 | $1,125 |
| $13,833.333 | $11,333.333 | $1,700 | $1,700 (maximum) |
| $50,000 | $47,500 | $7,125 | $1,700 (capped) |
Who gets the full refundable amount
Most working parents with earned income above approximately $13,833.333per child will qualify for the maximum $1,700 ACTC per child, assuming their MAGI is below the phase-out threshold ($200,000 for single filers, $400,000 for MFJ).
For two children, you need at least $25,166.667 in earned income to receive the full $3,400 ACTC refundable amount.
These thresholds are within reach for most full-time workers, which is why the majority of parents with qualifying children receive the full refundable ACTC when they file.
Who gets less or nothing refundable
Two groups receive a reduced or zero refundable ACTC:
- Very low earned income: If your earned income is $2,500 or less, the ACTC is zero regardless of the number of children. Every dollar of earned income above $2,500 generates $0.15 of ACTC.
- High MAGI (phase-out): If your MAGI exceeds $200,000(single/MFS/HoH) or $400,000 (MFJ), the total $2,200credit is reduced by $50 for each $1,000 above the threshold. As the total credit shrinks, the refundable ACTC portion shrinks with it.
- No earned income: If you have zero earned income (for example, you live only on investment income or Social Security), the ACTC is zero. You may still claim the non-refundable $500 portion if you have tax liability, but the refundable ACTC requires earned income.
What OBBBA changed
The One Big Beautiful Budget Act (OBBBA), effective for 2026, made two changes that benefit families with children:
- Increased the total credit to $2,200: The CTC amount per qualifying child was increased and made permanent under OBBBA.
- Raised the refundable ACTC cap to $1,700: The maximum refundable portion per child increased to $1,700. Before OBBBA, the refundable cap was scheduled to revert, which would have reduced the amount available to lower-income working families.
The non-refundable portion is the difference: $2,200 total minus $1,700 refundable cap equals $500 non-refundable.
Worked examples
Example 1: Single parent, $38,000 earned income, 1 child
Earned income above $2,500: $35,500. ACTC = 15% x $35,500 = $5,325, but capped at $1,700. Suppose this parent's tax liability before the CTC is $1,800. The $500 non-refundable portion reduces the tax to $1,300 ($500 exceeds liability, so tax goes to zero at $1,800 of credit used). The remaining $1,700 refundable ACTC is limited by the cap: refund of $1,700.
Example 2: MFJ couple, $60,000 combined earned income, 2 children
Full credit: $4,400. MAGI well below $400,000, no phase-out. ACTC calculation: 15% x ($60,000 - $2,500) = $8,625, capped at $3,400 for 2 children. If tax liability is $3,200, the non-refundable portion (up to $1,000) reduces tax to zero. The remaining refundable ACTC (up to $3,400) pays out as a refund, limited by the ACTC formula.
Example 3: Single filer, $250,000 MAGI, 1 child (partial phase-out)
MAGI exceeds the $200,000 threshold by $50,000. Phase-out reduction: ceil($50,000 / $1,000) x $50 = 50 x $50 = $2,500 reduction. Remaining credit: $2,200 - $2,500 = $-300. Only $500 of that is non-refundable and up to $0is refundable, depending on earned income and tax liability.
Use the Child Tax Credit Calculator to estimate your specific credit based on your income, filing status, and number of children.