2018 Tax Law Changes

Pursuant to the Act, the child tax credit is increased to $2,000 per eligible child for 2018 through 2025. The income level at which the credit phase-out begins is increased to $400,000 for taxpayers filing married filing jointly and $200,000 for all others. The credit continues to phase out at a rate of $50 for every $1,000 that AGI exceeds the threshold amounts. The refundability of the credit was also modified so that the earned income threshold is reduced to $2,500. No child tax credit will be allowed unless the taxpayer provides the child’s Social Security Number. The Act creates a new non-refundable $500 credit for each dependent (using the definition that exists currently) other than a qualifying child. Under pre-Act provisions, a taxpayer could claim a child tax credit of up to $1,000 per qualifying child under the age of 17. This amount would be phased out by $50 for every $1,000 that the taxpayer’s AGI exceeded certain threshold amounts.