Not sure what to enter in Step 3? Get your exact numbers in 60 seconds.
Open the free calculator →TL;DR
- $2,200 per qualifying child under 17
- $500 per other dependent (college kids, elderly parents, etc.)
- Enter the total — it reduces annual withholding dollar-for-dollar
- Only one spouse should claim — not both
- Credit phases out above $200K (single) / $400K (married)
What Step 3 actually does
When you enter a dollar amount in Step 3, your employer reduces your annual withholding by that exact amount. If you enter $2,200, your employer withholds up to $2,200 less per year — spread across your pay periods. On a biweekly schedule, that's roughly $85 more per paycheck.
It works this way because the child tax credit and dependent credit directly offset your tax liability. Step 3 simply pre-applies that offset to your withholding rather than making you wait until you file.
Per the 2026 Form W-4, you can also add an estimate of other credits you expect, such as the foreign tax credit or education credits, to the dependent amounts and enter the total in Step 3.
Who qualifies — and for how much
Qualifying child under 17 — $2,200 each
Child Tax Credit- ·Under age 17 at the end of the tax year
- ·Your child, stepchild, foster child, sibling, or descendant of any of these
- ·Lived with you for more than half the year
- ·Did not provide more than half of their own financial support
- ·Has the required Social Security number
Other dependents — $500 each
Credit for Other Dependents- ·Qualifying child age 17 or older (college students, for example)
- ·Qualifying relative: elderly parent, sibling, or other relative you support
- ·Anyone who doesn't qualify for the full $2,200 child credit
How to calculate your Step 3 amount
Count your qualifying children under 17: multiply by $2,200
Count other dependents: multiply by $500
Add both amounts together
Enter the total in Step 3
📊 Example: 2 kids under 17, 1 college student
2 qualifying children × $2,200 = $4,400
1 other dependent × $500 = $500
Step 3 total: $4,900
Effect: your annual withholding decreases by up to $4,900 — about $188 more per biweekly paycheck.
The two-spouse rule: only one W-4 gets Step 3
If you and your spouse both work, only oneof you should enter dependents in Step 3. It doesn't matter which one — but it should only happen on one W-4. The full two-income walkthrough is in the W-4 for married couples who both work; single parents who may qualify for the larger standard deduction should read the head of household guide.
If both spouses enter the same dependents, the combined withholding reduction is $4,400 instead of $2,200 (for one qualifying child). You'll receive $4,400 less in withholding throughout the year, but only have a $2,200 credit to show for it at filing — leaving you $2,200 short.
⚠️ High earners: the phase-out matters
The child tax credit phases out at $200,000 (single) and $400,000 (married filing jointly). Above these thresholds, the credit is reduced by $50 for every $1,000 of income over the limit. The Step 3 instructions on the W-4 apply if your total income will be $200,000 or less ($400,000 if married filing jointly). Above that, use the IRS estimator for a more accurate Step 3 amount — entering the full $2,200 per child may result in under-withholding.
Calculate your withholding with dependents — free
Enter your dependents to see exactly how much less you should withhold.
Open the W-4 Calculator →Key terms in this article
Related guides
W-4 After Having a Baby: What to Enter in Step 3 (2026)
Enter $2,200 per child in Step 3, decide which spouse claims it, and see how much more you take home each paycheck.
How to Update Your W-4 After a Divorce (2026 Guide)
Divorce changes your filing status from MFJ to single or head of household. Here's how to update your W-4 and avoid a surprise tax bill.
W-4 After Marriage: Update It or Claim Single? (2026 Guide)
Can you claim single on your W-4 after marriage? What to change in Steps 1-3, how to handle two incomes with Step 2, and how to avoid an April tax bill.
How to Fill Out a W-4 Form in 2026: Complete Step-by-Step Guide
Complete walkthrough of all five W-4 steps for 2026 — from filing status to extra withholding, the new OBBBA deductions, common mistakes and when to update.
W-4 When Your Child Turns 17: The $2,200 Credit Drops to $500 (2026)
The year your child turns 17 the credit falls from $2,200 to $500. Update Step 3 so you do not under-withhold by $1,700.
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