What’s the difference between the child tax credit and a dependent exemption?

An exemption will directly reduce your income. A credit will reduce your tax liability.

A dependent exemption is the income you can exclude from taxable income for each of your dependents. Prior to tax year 2018, you could exclude $4,700 for each dependent.

The child tax credit is a credit that offsets the tax you owe dollar for dollar. You can only claim the child tax credit if you claim the child as a dependent.  Learn more about the 2023 child tax credit.