Family Tax Credits: What Parents Need to Know for 2025

Raising a family comes with plenty of financial responsibilities, and valuable tax relief. Several family-related tax credits may be available to you, and because credits reduce your tax bill dollar for dollar, they can have a meaningful impact on your overall tax savings.

Below is an overview of key child, family, adoption, and education tax credits to keep in mind for the 2025 tax year.

Child, Dependent, and Adoption Credits

Depending on your circumstances, you may qualify for one or more of the following credits:

1.    Child Tax Credit

In 2025, the child tax credit is $2,200 per qualifying child under age 17. The phaseout starts at $400,000 MAGI for joint filers and $200,000 for heads of household. Up to $1,700 per child is refundable if the credit exceeds your tax liability.

2.    Credit for Other Dependents

If you support dependents who don’t qualify for the child tax credit like such an older child or an elderly parent, you may be eligible for a nonrefundable credit of up to $500 per dependent.

This credit follows the same income phaseout thresholds as the child tax credit.

3.    Child and Dependent Care Credit

If you paid for care for a child under 13 or another qualifying dependent to work, you may be eligible for the child and dependent care credit. The credit is typically 20% of qualified expenses, up to $600 for one individual or $1,200 for two or more.

** Note: Expenses reimbursed through an employer-sponsored dependent care FSA can’t be used to claim this credit.

4.    Adoption Credit

If your family had eligible adoption expenses in 2025, you could claim an adoption credit of up to $17,280 for each child. The credit starts to phase out once your MAGI reach $259,190, no matter how you file taxes.

Beginning in 2025, $5,000 of this credit is refundable, and you can carry forward any remaining nonrefundable amount for up to five years.

Higher Education Credits

If you’re helping pay for a child’s college education, one of these credits may apply:

1.    American Opportunity Tax Credit

This credit covers 100% of the first $2,000 and 25% of the next $2,000 of qualified undergraduate expenses, up to $2,500 per student each year. It's available for the first four years of postsecondary education toward a degree or credential.

2.    Lifetime Learning Credit

If you can't use the American Opportunity credit for education expenses, the Lifetime Learning credit offers up to $2,000 per tax return for a wider range of postsecondary education and training. Both credits start phasing out at $160,000 for joint filers and $80,000 for heads of household.

Tax-free distributions from a Section 529 plan or Coverdell Education Savings Account can be used, but not for expenses claimed for an education credit. If your income is too high for a credit, your child might qualify instead.

Make the Most of Your Family Tax Benefits

Family tax credits can lower your tax bill, but eligibility and income limits are complex.

Contact us for guidance to identify which credits you qualify for and maximize your benefits on your 2025 return.