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3 Family-Friendly Tax Benefits in the New Tax Law

Understanding how new tax laws affect your family’s finances is essential for maximizing savings and avoiding missed opportunities. The recently passed One Big Beautiful Bill Act (OBBA) introduces several family-friendly changes that can directly reduce your tax bill in 2025.

Let’s break down the three biggest updates you need to know.

 

The Child Tax Credit Gets a Boost

If you’re a parent, this is good news. The Child Tax Credit (CTC) increases from $2,000 to $2,200 per qualifying child under age 17 for 2025. That’s a direct dollar-for-dollar reduction on your tax bill.

Starting in 2026, the CTC will also be adjusted annually for inflation, helping maintain its value as the cost of living rises.

Here’s what to know:

  • Refundable portion: For 2025, up to $1,700 of the credit is refundable — meaning you could get it back even if your tax bill is zero.

  • Income thresholds: The phase-out starts at $200,000 for single filers and $400,000 for married couples filing jointly.

  • New documentation rule: Beginning in 2025, both the child and the taxpayer must have valid Social Security numbers (SSNs). For joint returns, at least one spouse must have an SSN.

Example:
 A family with two qualifying children could receive up to $4,400 in total credits, and if they owe less in taxes, they could still get a refund of up to $3,400 through the refundable portion.

This credit remains one of the most effective ways for families to lower their tax burden each year.

 

The $500 Credit for Other Dependents Is Now Permanent

If you support a college-aged child, elderly parent, or other relative, you may qualify for the Credit for Other Dependents (COD).

Previously set to expire after 2025, the OBBA now makes this $500 credit permanent — a big win for families providing multi-generational support.

Here’s how it works:

  • You can claim $500 per qualifying dependent who doesn’t meet the CTC requirements.

  • The income phase-out limits are the same as the CTC: $200,000 (single) and $400,000 (married filing jointly).

  • The credit is non-refundable, meaning it can reduce your tax owed to zero but won’t result in a refund.

  • Unlike the CTC, this credit is not indexed for inflation.

Example:
 If you’re supporting your college student and an aging parent, you could qualify for up to $1,000 in credits each year — permanently.

 

Adoption Credit Becomes Partially Refundable

For adoptive families, the OBBA brings one of the most meaningful changes yet.

In 2025, the Adoption Credit increases to a maximum of $17,280 per child. For the first time, up to $5,000 of that credit can be refundable — even if you owe no income tax.

That’s a major financial boost for families completing the adoption process.

Key details:

  • The credit begins to phase out at $259,190 in modified adjusted gross income (MAGI) and fully phases out at $299,190.

  • Any non-refundable portion can be carried forward for up to five years.

  • The refundable portion cannot be carried forward — it’s for the current tax year only.

Example:
 If your total adoption expenses qualify for the full $17,280 credit but your tax bill is only $3,000, you can still receive a $5,000 refund — giving you $8,000 in total benefits.

 

Why These Updates Matter

The One Big Beautiful Bill Act was designed to support working families, caregivers, and adoptive parents — three groups who often face high costs and limited relief.

These updated credits offer:

  • More direct cash savings through refundable credits

  • Greater stability with permanent provisions

  • Stronger incentives for family growth and caregiving support

However, understanding how each credit applies to your specific situation can be tricky. The interaction between income limits, refundable portions, and filing status can significantly affect your total tax savings.

 

Conclusion

The new OBBA tax changes offer meaningful relief for families, but taking advantage of them requires careful planning. Whether you’re claiming the Child Tax Credit, supporting dependents, or completing an adoption, it’s important to ensure every detail is correct on your return.

If you’re unsure how these updates apply to you, working with a CPA can help you maximize your benefits and avoid costly errors.

📞 Contact Guerrero CPA at 210-490-7100 to schedule a consultation. Our team can help you understand the new credits, file accurately, and make the most of every tax-saving opportunity available in 2025.