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Credits

Tax credits: the breaks that cut your tax dollar for dollar

A $1,000 deduction might save you $120. A $1,000 credit saves you $1,000. Here are the main federal credits for individuals, how they work, and which ones people miss.

Federal rules for the 2025 tax year, with 2026 changes marked. Most credits have income limits and need a valid Social Security number.

Three kinds of credits

NonrefundableCan lower your tax to zero, but anything left over is lost.
RefundablePaid to you even if you owe no tax. That's why some people get refunds bigger than what was withheld.
Partly refundablePart works like a nonrefundable credit, and part can be paid to you.

Family credits

Child tax credit Partly refundable
Up to $2,200 for each qualifying child under 17 for 2025. Up to $1,700 per child can be refunded if you have enough earned income. Shrinks above $200,000 of income ($400,000 if married filing jointly). Claimed on: Schedule 8812 → lines 19 and 28
Credit for other dependents Nonrefundable
Up to $500 for dependents who don't qualify for the child tax credit, like a child who is 17 or older, a college student or a parent you support. Claimed on: Schedule 8812 → line 19
Child and dependent care credit Changed for 2026
A share of what you pay for care so you can work: for 2025, 20% to 35% of up to $3,000 of costs for one person or $6,000 for two or more. Starting in 2026, the top rate rises to 50% for lower incomes. Claimed on: Form 2441 → Schedule 3
Adoption credit Partly refundable
Helps with qualified adoption costs. Starting with 2025, up to $5,000 of it can be refunded. Claimed on: Form 8839 → Schedule 3

Work and savings credits

Earned income credit (EIC) Refundable
For workers with low to moderate income. For 2025 the maximum is $649 with no children, $4,328 with one child, $7,152 with two and $8,046 with three or more. Income and investment limits apply. Claimed on: Line 27 (Schedule EIC if you have a qualifying child)
Saver's credit Nonrefundable
For contributions to a 401(k), IRA or similar plan if your income is under the limit. Worth 10%, 20% or 50% of up to $2,000 contributed per person. Claimed on: Form 8880 → Schedule 3

Education credits

American opportunity credit Partly refundable
Up to $2,500 per eligible student for the first four years of college. Up to 40% of it ($1,000) can be refunded. Claimed on: Form 8863 → Schedule 3 and line 29
Lifetime learning credit Nonrefundable
Up to $2,000 per return for college, graduate school or job-skill courses. No limit on the number of years. Claimed on: Form 8863 → Schedule 3

You can't claim both for the same student in the same year. See the student guide for more.

Health and other credits

Premium tax credit Refundable
Helps pay for health insurance bought through the Marketplace. If it was paid in advance to your insurer, you must reconcile it on your return, which can raise or lower your refund. Claimed on: Form 8962 → Schedule 2 or Schedule 3
Credit for the elderly or disabled Nonrefundable
For people 65 or older, or retired on permanent and total disability, with income under set limits. Claimed on: Schedule R → Schedule 3
Foreign tax credit Nonrefundable
For income tax you paid to another country on the same income, so it isn't taxed twice. Claimed on: Form 1116 or directly on Schedule 3

Credits that ended under the 2025 tax law

These may still apply to a 2025 return if you qualified before the cutoff date, but they're gone for later years.

Clean vehicle credits Ended
The new and used electric vehicle credits don't apply to vehicles acquired after September 30, 2025. Claimed on: Form 8936
Energy efficient home improvement credit Ended
For things like insulation, windows, doors and heat pumps. Not allowed for property placed in service after December 31, 2025. Claimed on: Form 5695
Residential clean energy credit Ended
For solar panels and similar systems. Not allowed for expenses made after December 31, 2025. Claimed on: Form 5695

Credits people often miss

  • The earned income credit for workers without children.
  • The $500 credit for older children, college students and relatives you support.
  • The saver's credit for people who put money in a retirement account.
  • The refundable part of the American opportunity credit, even if you owe no tax.
  • The child and dependent care credit for summer day camp and after-school care.

Sources

Last updated: November 14, 2026

This page was written from the sources below. Official sources are from the IRS or another government body; secondary sources are tax publications used to cross-check new rules. Tax law changes, so always confirm with the official source for the year you're filing.