Definition
The Child Tax Credit is a federal tax credit that directly reduces your tax liability by $2,200 per qualifying child under age 17 as of December 31 of the tax year (under OBBBA 2026 — raised from $2,000). Unlike deductions, which reduce taxable income, credits reduce tax dollar-for-dollar.
A qualifying child must be under 17, related to you, have lived with you for more than half the year, not have provided more than half their own financial support, and have a valid Social Security number. The credit begins to phase out at $200,000 AGI for single filers and $400,000 for married filing jointly.
The refundable portion (Additional Child Tax Credit) can be refunded even if it exceeds your tax liability.
How this affects your W-4
On your W-4, you capture the child tax credit in Step 3. Enter $2,200 per qualifying child under 17. This reduces your annual withholding dollar-for-dollar — if you have two qualifying children, your withholding drops by $4,400/year, or about $169 per biweekly paycheck.
If your income is above the phase-out thresholds, reduce your Step 3 entry proportionally to avoid under-withholding.
See how child tax credit affects your withholding
Use the free W-4 calculator to calculate your exact withholding with your specific situation.
Open the W-4 Calculator →Related terms
Dependent
A qualifying person (usually a child or relative) you support — claimed on your W-4 to reduce withholding.
Adjusted Gross Income (AGI)
Your total income minus above-the-line deductions — the number used to calculate many tax phaseouts.
W-4 Form
The IRS form employees submit to their employer to control how much federal tax is withheld.