Changes in 2025 Child Tax Credit Policies and Their Effect on Lone Parents
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The new "One Big Beautiful Bill Act" (OBBBA) for 2025 has brought significant changes to the Child Tax Credit (CTC). One of the key modifications is a stricter Social Security number (SSN) requirement that could exclude millions of children from the credit.
Under the new rules, both the taxpayer (and spouse if filing jointly) and the qualifying child must have work-eligible SSNs. This requirement disqualifies many children in mixed-status households, even if they are U.S. citizens.
The maximum Child Tax Credit per eligible child increases from $2,000 to $2,200, indexed for inflation thereafter. However, the refundable portion of the credit is capped at about $1,700 per child for 2024 and 2025.
The credit phaseout thresholds remain at $200,000 for single filers and $400,000 for married filing jointly and will be adjusted for inflation starting in 2026.
The changes in eligibility and benefits also limit access for some moderate- and low-income families. Income thresholds needed to qualify fully for the increased credit have increased, further restricting access.
For instance, in California, an estimated 910,000 children would no longer qualify for the Child Tax Credit. Similarly, in Florida, as many as 247,000 children would be prohibited from claiming the credit. In Texas, 875,000 U.S. citizen children would not qualify, and in California, it is estimated that 4.5 million citizen and legally permanent resident children with SSNs will no longer qualify.
The Head of Household filing status offers a larger standard deduction compared to single filers, and selecting this status can help a single parent claim popular family tax breaks, such as the Child Tax Credit. For the 2025 tax year, the standard deduction for a Head of Household filer is $23,625, while it is $15,750 for single filers.
It's important to note that under Trump's new policy, mixed-status households, including those with U.S. citizen children, are no longer eligible for the Child Tax Credit.
Other changes in the 2025 tax year include the permanent increase in the Child and Dependent Care Tax Credit, allowing households to claim 50% for qualifying expenses. Additionally, the adoption tax credit for the 2025 tax year is worth up to $17,280.
In conclusion, the key factor restricting eligibility for mixed-status families in 2025 is the new SSN requirement for both claimant and child, which tightens access to the Child Tax Credit despite the increased credit amount.
In the context of the updated tax laws for 2025, the stricter Social Security number (SSN) requirement affects personal-finance matters for families with mixed-status household members, potentially disqualifying them from receiving the Child Tax Credit, regardless of their U.S. citizenship status. Additionally, in the realm of business and finance, the Head of Household filing status can offer advantages for single parents, such as a larger standard deduction and eligibility for the Child Tax Credit, which has increased from $2,000 to $2,200.
