One Big Beautiful Bill Child Tax Credit updates and other changes for families

The One Big Beautiful Bill Act (OBBBA) passed in July 2025 and includes sweeping changes to family-focused tax benefits. For families, the OBBBA means increases in certain tax credits, new savings opportunities, and expanded eligibility for existing benefits. These changes could impact how much you owe—or get back—at tax time.

At H&R Block, we’re here to help you understand how these changes impact you. We’ll share how the Big Beautiful Bill modifies the 2025 Child Tax Credit, Adoption Tax Credit, 529 Plan, Child and Dependent Care Credit, and initiates new Trump savings accounts.

In this post, we’ll cover the changes families will want to know about, including:

• Child Tax Credit increases
• Other Dependent Credit is now made permanent
• New refundable portion of the Adoption Tax Credit
• The 529 account plans
• Trump Savings Accounts

The Child Tax Credit provides financial support to families with children. You may have also heard this called the Trump Child Tax Credit 2025.

What’s changed?

You may have seen in the headlines that there are changes to the Child Tax Credit with The Big Beautiful Bill. Specifically, it increases $200 to expand tax savings for American families.

How much is the Child Tax Credit for 2025?—The Child Tax Credit is now $2,200 per child, up from $2,000, with the changes from the OBBBA.

Here’s more detail about the Child Tax Credit 2025 and beyond:

• Phaseout thresholds for the Child Tax Credit for 2025 are $200,000 for Single filers and $400,000 for Married Filing Jointly couples. These thresholds will remain in place for 2026.
• The credit will be adjusted annually for inflation starting in 2026.
• Your Social Security number (or your spouse’s if you’re Married Filing Jointly) will be required along with the qualifying child’s to claim the credit.

How will the One Big Beautiful Bill Act affect you?

Check out a breakdown of key changes from the One Big Beautiful Bill Act (OBBBA).

Review OBBBA tax reform changes

Other Dependent Credit

Families who have dependents that don’t qualify for the Child Tax Credit—such as older children, parents, or other adult relatives—may still be eligible for the Other Dependent Credit.

• The $500 credit is now permanent—it was previously subject to expiration.
• The credit remains non-refundable, meaning it can reduce your tax liability to zero but won’t result in a refund if the credit exceeds your tax owed.
• The OBBBA fixes the credit amount so there’s no inflation adjustment in coming years.

529 plan expansion and education-related provisions

529 plans are tax-advantaged savings accounts parents and students can use for educational expenses. The OBBBA expands how 529 Plan funds may be spent to cover additional scenarios and amounts.

What’s changed?

• The OBBBA expands use of funds for non-tuition qualified expenses for K-12 costs, such as books, online learning materials, and tutoring fees. This change is effective beginning in 2025.
• The law now allows 529s to cover expenses for additional post-secondary educational costs such as tuition, fees, books, supplies, and equipment for credentialed programs (like testing fees for college credentials, or continuing education fees). This change is effective beginning in 2025.
• You can withdrawal up to $20,000 per year in a 529 plan to pay for K-12 expenses (up from the previous $10,000). This change is effective beginning in 2026.

Education-related credit changes

Starting in 2026, a Social Security number (SSN) will be required to claim the American Opportunity Credit and Lifetime Learning Credit as well as to claim the Student Loan Debt Cancelation exclusion.

Child and Dependent Care Credit – 2026 and beyond

The Child and Dependent Care Credit is another valuable tax credit for families. It covers a percentage of childcare expenses for children under 13 or dependents who can’t care for themselves.

What’s changed?

The OBBBA changes a few elements of the Child and Dependent Care Credit. Starting in 2026, you can claim up to 50% of eligible expenses, but amount of expenses used to calculate the credit stays the same at $3,000 (one person) or $6,000 (two+ people).  

Additionally, the phase-down ranges are at higher income levels (from your Adjusted Gross Income) than previously. For example:

For Single filers with an AGI:

• Between $0 and $15,000, the credit percentage is 50%.
• Between $15,000 and $45,000, the credit phases down from 50% to 35%.
• Between $45,000 through $75,000, the credit percentage is 35%.
• Between $75,000 and $105,000, the credit percentage phases down from 35% to 20%.
• Over $105,000, the credit percentage is 20%.

For Married Filing Jointly filers with an AGI:

• Between $0 and $15,000, the credit percentage is 50%.
• Between $15,000 and $45,000, the credit phases down from 50% to 35%.
• Between $45,000 and $150,000, the credit percentage is 35%.
• Between $150,000 and $210,000, the credit percentage phases down from 35% to 20%.
• Over $210,000, the credit percentage is 20%.

The credit is still worth up to 50% of $3,000 in expenses for one child or $6,000 for two or more.

Adoption Tax Credit (2025 and beyond)

The Adoption Credit reduces the tax liability on a dollar-for-dollar basis for adoptive families.

What’s changed?

The OBBBA makes the Adoption Tax Credit for 2025 and beyond partially refundable, up to $5,000. Previously, the credit was non-refundable, meaning it could reduce the tax you owe to zero, but it couldn’t provide you with a tax refund.

The new law allows more families to benefit from the credit as well as make adoption more financially accessible.

The total credit remains up to $17,280 in 2025.

Trump Savings Accounts

The OBBBA introduces the Trump Child Savings Account, a new type of savings account for children under the age of 18.

What are Trump accounts? Trump accounts are tax-advantaged savings accounts intended to give newborns and children a financial head start and to encourage early savings for a child’s future.

What’s new?

• The contribution limit is $5,000 per tax year (and will adjust for inflation after 2027) until the child turns 18. When the child turns 18, the contribution rules are the same as those for traditional IRAs.
• The new accounts will likely work like Traditional IRAs with special rules before the child turns 18. The account is a custodial trust account where the beneficiary is the minor.
• For babies born between 2025 and 2028, who are U.S. citizens and whose parents have a valid Social Security number, the federal government will make a one-time $1,000 contribution to a Trump Savings Account.

Get help navigating tax changes impacting parents and families

Navigating tax law changes like those in the One Big Beautiful Bill can be overwhelming—but you don’t have to do it alone. At H&R Block, we’re here to help you understand how the 2025 Child Tax Credit, Child and Dependent Care Credit, and other tax updates affect your return.

Whether you choose to file with a tax pro or file with H&R Block Online, you can rest assured that we’ll get you the biggest refund possible.