Additional child tax credit: how the refundable $1,700 is figured

What the additional child tax credit is

The additional child tax credit is the portion of the child tax credit that the IRS pays out even when you owe no income tax. The regular credit is nonrefundable: it can only cancel tax you owe. When your tax is smaller than your credit, the ACTC turns part of the leftover amount into a refund.

For 2026 returns filed in 2027, each qualifying child is worth up to $2,200 in total, and up to $1,700 of that can come back as a refund, according to Rev. Proc. 2025-32. The rules for who counts as a qualifying child are the same for both parts; see the child tax credit guide for the age, residency and dependency tests.

How much of the child tax credit is refundable?

At most $1,700 per child for 2026, and often less. Your ACTC is the smallest of three numbers:

1. The unused credit: the part of your child tax credit that your tax did not absorb (Schedule 8812 line 16a).
2. The per-child cap: $1,700 times the number of qualifying children with a valid SSN (line 16b).
3. The earned income limit: 15% of your earned income above $2,500 (line 20), or the Part II-B amount if you have three or more children and it is larger.

The $500 credit for other dependents never produces an ACTC. If your only dependents are a 17-year-old, a college student or a parent, nothing in Part II applies to you. See the credit for other dependents for that separate $500 credit.

How is the ACTC calculated: 15% of earned income over $2,500

The earned income test is what makes the ACTC a work-based credit. Earned income here means wages, salary, tips and net self-employment earnings reported on your return. You may also elect to include nontaxable combat pay (line 18b). Unemployment benefits, Social Security, pensions and investment income do not count.

Subtract $2,500 from earned income, then multiply by 15%. Someone with $12,000 of wages gets an earned income limit of $1,425 ($9,500 x 15%). Someone with $2,400 of wages gets zero, no matter how many children they have.

Earned income needed to receive the full ACTC

If your income tax is zero, the 15% formula decides everything. Working backward from the $1,700 cap gives the earned income at which each family size reaches the maximum refundable amount:

These break-even points assume no income tax and no Part II-B calculation. Families who owe some tax reach the full $2,200 per child sooner, because the nonrefundable part covers the gap first.

Additional child tax credit 2026: three worked examples

The examples use 2026 figures: the $24,150 head of household standard deduction and the $32,200 joint standard deduction from Rev. Proc. 2025-32. They assume no other credits.

Example 1: no income tax, two children

A head of household parent earns $20,000 in wages. After the standard deduction, taxable income is zero, so the nonrefundable credit is zero. The unused credit is $4,400, the per-child cap is $3,400, and the earned income limit is $2,625 ($17,500 x 15%). The ACTC is $2,625, the smallest of the three.

Example 2: some tax, one child

A head of household parent earns $40,000. Taxable income is $15,850 and the tax is $1,585, all in the 10% bracket. The child tax credit wipes out the $1,585 of tax, leaving $615 unused. The earned income limit is $5,625, so the ACTC is $615 and the family receives the full $2,200 value between the two parts.

Example 3: married couple, three children, moderate wages

A couple filing jointly earns $30,000 in wages. Taxable income is zero after the $32,200 deduction. The unused credit is $6,600, the cap is $5,100 and the earned income limit is $4,125 ($27,500 x 15%). Because they have three children, they may also try Part II-B, described next. If it does not produce more, their ACTC is $4,125.

The three-or-more children alternative (Part II-B)

When line 16b is $5,100 or more, meaning three or more qualifying children, you can compare the 15% figure with a second method. It starts with the Social Security and Medicare taxes withheld from your W-2s (boxes 4 and 6), adds half of any self-employment tax and certain other payroll taxes, then subtracts your earned income credit and any excess Social Security tax credit.

You use whichever result is larger, still capped at line 17. In practice this second method helps mostly when a large family receives little or no earned income credit, because the EITC is subtracted in full. In Example 3, $2,295 of withheld payroll tax minus a much larger EITC leaves zero, so the 15% result stands. The earned income credit guide explains how that credit is figured.

Schedule 8812 walkthrough for the refundable child tax credit

Tax software fills in these lines, but knowing them helps you check the result. The line numbers below come from the 2026 draft of Schedule 8812, which matches the 2025 final form for these parts.

1. Check the Child tax credit box for each qualifying child in the Dependents section of Form 1040.
2. Part I, lines 1 to 12: enter modified AGI, count children (line 4) and other dependents (line 6), and apply any income phaseout.
3. Line 13: enter your tax limit from Credit Limit Worksheet A, which is your tax minus credits such as the foreign tax, child care, education and saver's credits.
4. Line 14: the smaller of lines 12 and 13 is your nonrefundable credit. It goes to Form 1040 line 19.
5. Part II-A, lines 16a to 20: find the unused credit, the $1,700-per-child cap and 15% of earned income above $2,500.
6. Part II-B, lines 21 to 26: complete only if you have three or more qualifying children and the 15% figure is lower than line 17.
7. Line 27: your additional child tax credit. It goes to Form 1040 line 28.

Why does my ACTC need earned income, and what if it comes out low?

Congress built the refundable part as a work incentive, so it phases in with pay rather than paying a flat amount. That is why a parent with no job and no tax gets no ACTC, and why a raise can increase the refund even when income tax stays at zero.

If your ACTC is smaller than you expected, the usual causes are earned income near $2,500, a child who turned 17, or a child without a valid SSN. The page on why a child tax credit comes out low walks through each cause. High earners lose the credit through the phaseout instead; see the child tax credit income limit.

Returns that claim the ACTC cannot be refunded before mid-February by law. The 2027 ACTC amount has not been announced; the IRS usually publishes it in October or November. Check the 2027 child tax credit page for updates.