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At Extreme Investor Network, we are committed to providing you with unique and valuable information to help you make informed decisions about your personal finances. Today, we’ll be discussing some key tax credit changes for 2025 that may impact you and your family.
Child Tax Credit for 2025
The refundable portion of the child tax credit remains at $1,700 for 2025, allowing families to claim this credit even if they have a zero tax balance on their tax returns. The maximum child tax credit of $2,000 per child under 17 is available to parents with up to $400,000 in modified adjusted gross income if they are married and filing jointly, or under $200,000 if they are single. It’s important to note that these terms are set to expire at the end of tax year 2025, with the credit scheduled to drop to a maximum of $1,000 per child.
Lawmakers are considering proposals to make the child tax credit more generous beyond 2025. These changes are standard adjustments for inflation to ensure that taxpayers do not face higher tax liabilities. However, families should be prepared for potentially higher tax liabilities in 2026 if Congress does not extend these provisions from the Tax Cuts and Jobs Act of 2017.
Earned Income Tax Credit for 2025
The earned income tax credit (EITC) is designed to assist low- to middle-income individuals and families reduce the amount of tax they owe or potentially provide a refund. In 2025, the maximum EITC amounts will increase, with higher amounts available for qualifying taxpayers with three or more eligible children compared to 2024.
To qualify for the EITC, individuals and families must meet certain thresholds for adjusted gross income. Additionally, there are limits on investment income that may disqualify taxpayers from claiming the credit. It’s important to stay informed about these thresholds to ensure eligibility for the EITC.
Adoption and Gift Tax Exclusion Changes
Other changes for 2025 announced by the IRS include adjustments to the maximum adoption credit and the annual exclusion for gifts. Families looking to adopt may benefit from the increased maximum adoption credit for qualified expenses. Additionally, the annual exclusion for gifts has been raised, allowing taxpayers to give more to their children without incurring gift tax liabilities.
At Extreme Investor Network, we understand the importance of staying up-to-date on changes in tax laws and credits that may impact your financial well-being. Be sure to check back for more insights and tips on how to navigate the world of personal finance with confidence.