What is the State Child Tax Credit?
Utah’s Child Tax Credit (CTC) allows eligible families to claim up to an additional $1,000 per qualifying child each year on their state taxes. Whether a parent stays home or both parents work, this tax credit can provide much-needed financial support. The credit will be available starting in 2025 when families file their 2024 taxes.
Who is Eligible for this Credit?
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Child Age Requirement: To qualify for this credit, a child must be between one and three years old on the last day of the claimant’s tax year. This means that a child between the ages of one and three in 2024 will be eligible when a family files taxes in 2025. Children below age one are not eligible for the child tax credit.
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Income Requirements: Families with an income up to $54,000 for a couple or up to $43,000 for a family with a single parent (also called Head of Household) can claim the credit.
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Reduced Credit for Higher Incomes: If a family surpasses the income threshold, they may still qualify for a reduced tax credit. The credit gradually reduces as household income increases.
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Non-Refundable Credit: Because the credit isn’t refundable, it can only reduce the amount of income taxes a family owes. Utah’s CTC doesn’t help families who don’t owe any state income taxes during tax season. Each family's tax liability varies each year. However, on average, a family with one adult and one child will not owe any income taxes until their annual income exceeds $37,000. Therefore, families earning less than this amount will not benefit from the credit.
How Does this Credit Help Families?
Like the federal Child Tax Credit, a state-level child tax credit helps families offset the costs associated with raising children. During the pandemic, the federal CTC was temporarily expanded and made refundable, granting families $300 per month per qualifying child under six and $250 per child aged six to seventeen – providing significant tax relief for working families. This federal expansion had a far-reaching impact, reducing child poverty to its lowest recorded level in 2021, from 9.7% in 2020 to 5.2% in 2021. Unfortunately, child poverty returned to 12.4% a year after the expansion ended. In Utah, the federal CTC expansion helped lift 32,000 children from poverty.
How Many Utah Families Benefit from the State Child Tax Credit?
According to an analysis from the Institute on Taxation and Economic Policy, 1.4% of households and 4.3% of children in Utah will benefit from the State CTC. Because the credit isn’t refundable, no eligible families will receive the full $1,000 credit. On average, eligible families can expect to save around $400 annually in taxes.
Recent State Child Tax Credit Expansion
To qualify for this credit currently, a child must be between one and three years old in the 2024 tax year, to be claimed in 2025 on one's 2024 tax return. Recent legislative action expanded the credit to cover children aged one through four starting in 2026 for filers filing their 2025 taxes. This expansion will extend benefits to more families, making 1.8% of families and 5.4% of children eligible for the tax credit. There is a 2025 legislative proposal to expand the child tax credit again.