The American Rescue Plan (ARP) made several notable but temporary changes to the child tax credit, including:
- Increasing the amount of the credit
- Making it available for qualifying children who turn age 17 in 2021
- Making it fully refundable for most taxpayers
- Allowing many taxpayers to receive half of the estimated 2021credit in advance
Taxpayers who have qualifying children under age 18 at the end of 2021 can now get the full credit even if they have little or no income. The credit is fully refundable even if it exceeds your actual federal income tax liability. The ARP increases the credit to as much as $3,000 per child age 6 -17, and $3,600 per child age 5 and under.
The maximum credit is available to taxpayers with a modified adjusted gross income of:
- $75,000 or less for single filers and married persons filing separate returns (mfs)
- $112,500 or less for heads of household
- $150,000 or less for married couples filing a joint return and qualifying widows/widowers
Above these income thresholds, the credit phases out. The credit is completely phased out when modified AGI is more than $200,000 for singles/mfs and $400,000 for joint returns.