Federal Child Tax Credit for 2026

The federal CTC gives you $2,000 per qualifying child under 17. Of that, up to $1,700 is refundable as the Additional Child Tax Credit (ACTC) — so even families with little or no federal tax liability can get a check.

Income phase-outs start at $200,000 for single filers and $400,000 for married filing jointly. The credit drops by $50 for every $1,000 above those limits. With two kids and a $450,000 AGI filing jointly, your $4,000 credit shrinks by $2,500, leaving you $1,500.

Qualifying child rules: under 17 at year-end, your dependent, lived with you more than half the year, has a valid Social Security number. Claimed on Schedule 8812 with your Form 1040.

California’s Young Child Tax Credit

California offers the Young Child Tax Credit (YCTC) for families with at least one child under age 6. For tax year 2026, the credit is worth up to $1,117 per return (not per child). You must also qualify for the California Earned Income Tax Credit to be eligible.

The income limit for CalEITC eligibility is approximately $30,950 for a family with three or more children. That cap limits who can claim the YCTC, but for families under the threshold, it’s a significant refundable credit on top of the federal CTC. You claim it on your California Form 540 using Schedule 3514.

California Earned Income Tax Credit (CalEITC)

The CalEITC is California’s version of the federal EITC, and it’s fully refundable. For 2026, maximum credit amounts are roughly:

• No qualifying children: up to $275
• 1 child: up to $1,843
• 2 children: up to $3,037
• 3+ children: up to $3,417

Combined with the federal EITC (up to $7,830 for 3+ kids), a qualifying LA family with three children could receive over $11,000 in earned income credits alone. Add the federal CTC and YCTC, and total credits can exceed $18,000.

You need earned income (W-2 wages or self-employment income) to qualify. Investment income must be under $11,600. File FTB 3514 with your state return.

Child and Dependent Care Credit for LA Families

This is separate from the CTC but works alongside it. The federal credit covers 20-35% of childcare expenses up to $3,000 for one child or $6,000 for two or more. At $6,000 in expenses and a 20% credit rate, that’s $1,200 off your federal bill.

California has its own child and dependent care credit that can be worth up to 50% of the federal credit amount for lower-income filers. If you’re paying for daycare, preschool, after-school programs, or summer camp in LA, keep every receipt and get your provider’s tax ID number. You’ll need it for Form 2441.

Income Phase-Out Examples for LA Families

LA incomes vary wildly by neighborhood and industry. Here’s how the federal CTC plays out at different levels:

• Married, 3 kids, $280,000 AGI: Full $6,000 credit. Well under the $400,000 threshold.
• Married, 2 kids, $420,000 AGI: Credit reduced by $1,000. You get $3,000 instead of $4,000.
• Single, 1 child, $210,000 AGI: Credit reduced by $500. You get $1,500.
• Single, 2 kids, $240,000 AGI: Credit reduced by $2,000. You get $2,000 instead of $4,000.

Pre-tax retirement contributions (traditional 401(k), traditional IRA) lower your AGI. If you’re close to a phase-out cliff, maxing out your 401(k) at $23,000 could preserve thousands in credits.