Expanded Child Tax Credit & New Eligibility Rules Under H.R.1 (2025 Update)

Expanded Child Tax Credit (CTC) Under H.R.1 – What Families Need to Know in 2025

The H.R.1 tax bill introduces major reforms to the Child Tax Credit (CTC) beginning in 2025, aiming to provide broader financial support to families across the United States. These changes are designed to increase the benefit amount, expand eligibility, and enhance refundability for low- and middle-income households.

This breakdown explains exactly how the updated CTC works, who qualifies, and how it differs from previous tax law.

1. Increased Maximum Child Tax Credit

Under existing law, the maximum Child Tax Credit is $2,000 per eligible child.
H.R.1 increases this amount significantly.

New Credit Amounts:

• $2,700 per qualifying child (ages 6–17)

• $3,200 per qualifying child under age 6

These increases are indexed for inflation, meaning the benefit will gradually rise over time.

2. Higher Refundable Portion (A Major Change)

The refundability rules have been updated to guarantee larger refunds for low-income earning families.

Refundable limits under H.R.1:

• Up to $1,800 becomes fully refundable

• Refundable amount begins phasing in from the first dollar of earned income

• No minimum income threshold required

This change eliminates the previous $2,500 income requirement, making the credit accessible to more families.

3. Updated Age Definitions

A key change in H.R.1 aligns the CTC age rules with those used in the American Rescue Plan (ARP):

New definitions:

• “Child” includes dependents up to age 17

• Previously, 17-year-olds were excluded

This reinstates eligibility for millions of teenagers.

4. Adjusted Phase-Out Thresholds

As with previous versions of the CTC, the credit phases out at higher income levels.
H.R.1 increases the thresholds to reflect inflation and family cost-of-living increases.

Phase-out begins at:

• $225,000 for single filers

• $450,000 for married filing jointly

These higher thresholds allow many upper-middle-income families to retain full or partial benefits.

5. Advance Monthly Payments May Return

H.R.1 authorizes the IRS to reintroduce monthly advance CTC payments, similar to the 2021 model.

Advance payment details:

• Up to 50% of the total yearly credit

• Distributed in monthly deposits

• Based on prior-year tax returns

Monthly payments provide immediate liquidity and more predictable cash flow for families.

6. Comparison: Old vs. New CTC Rules

7. Who Benefits Most?

Most benefited:

• Low-income households (greater refundability)

• Families with young children

• Households with children aged 17

• Middle- to upper-middle-income earners under new thresholds

Least benefited:

• High-income filers above phase-out

• Households without dependents

8. Bottom Line

The 2025 expansion of the Child Tax Credit under H.R.1 delivers one of the largest family-focused tax reforms in recent years. With higher credit amounts, expanded eligibility, and enhanced refundability, millions of U.S. families—especially young parents and low-income earners—stand to see significant financial relief.