20 Child Tax Credits That Could Boost Your Refund
Maximize your tax refund by claiming powerful tax credits that put real money back in your pocket—don’t leave free cash on the table!
- Alyana Aguja
- 6 min read
Tax credits are one of the strongest means of maximizing your refund and getting more cash in your wallet—but millions of Americans leave them behind each year. From Child Tax Credit to Electric Vehicle Credit, these credits recognize families, students, homeowners, and businesses for doing the right thing with their finances. Whether saving for retirement, financing education, or making home improvements, taking the correct credits can be thousands in tax savings—so don’t leave free money on the table!
1. Earned Income Tax Credit (EITC)
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For low to moderate-income employees, the EITC is worth as much as $7,430 for workers with three or more children (2023 tax year). Even if you owe no taxes, this credit may mean a large refund check. The IRS figures that millions of eligible taxpayers do not claim it annually!
2. Child Tax Credit (CTC)
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Parents can claim $2,000 per child who is under age 17 and have $1,600 that can be credited back in 2023. This credit can lower tax due, so even higher-income families may find it useful. A few lawmakers want to make it bigger, so keep an eye out for updates!
3. Child and Dependent Care Credit
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If you spend money on daycare, babysitters, or after-school activities, you might be eligible for a credit of as much as $1,050 for each child (or $2,100 if you have two or more). It reimburses up to 35% of the allowable expenses for working individuals or students. This credit is different from deductions because it actually reduces your tax dollar-for-dollar!
4. American Opportunity Tax Credit (AOTC)
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College students (or their parents) can claim up to $2,500 per student for tuition, books, and materials. The great news? $1,000 is refundable, so you can receive cash back even if you owe nothing. This works for the first four years of college.
5. Lifetime Learning Credit (LLC)
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Unlike the AOTC, this does not have a four-year limit or include any educational level, such as job training. You may claim 20% of education expenses up to $2,000 per return. It’s a wonderful opportunity for grad students and lifelong learners!
6. Saver’s Credit (Retirement Savings Contributions Credit)
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If you’re saving for retirement and your income is low to moderate, the IRS may thank you for it. This credit pays 10% to 50% of contributions to an IRA, 401(k), or comparable plan up to $1,000 ($2,000 for joint filers). Too many people miss out because they don’t know that saving for retirement can save on taxes, too!
7. Premium Tax Credit (PTC)
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If you purchased health coverage through the Marketplace, you may be eligible for this credit. It reduces your monthly premium or provides a credit on your tax return. The credit varies based on income, family size, and the cost of the plan.
8. Adoption Credit
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Fostering a child is gratifying but costly, so the IRS provides a maximum of $15,950 for each child (2023). This credit includes adoption fees, court expenses, and travel. It’s non-refundable, which means it merely offsets tax liability, but it can be forwarded for up to five years!
9. Residential Clean Energy Credit
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Going solar or using renewable energy can save you a great deal of taxes. The federal government provides a 30% credit for the expenses incurred in solar panels, wind turbines, and geothermal heat pumps. This can amount to thousands in tax savings if you go green!
10. Energy Efficient Home Improvement Credit
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Replacing your home with energy-efficient windows, doors, insulation, or heat pumps may make you eligible for a 30% credit of up to $3,200 annually. This has a $1,200 cap for overall improvements and a $2,000 cap for heat pumps. Even minor upgrades can save you big money!
11. Electric Vehicle (EV) Tax Credit
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If you purchase a new electric vehicle (EV) that qualifies under IRS standards, you might earn a credit of up to $7,500. Used EVs are eligible for up to $4,000. However, make sure to verify manufacturer eligibility, as not all vehicles qualify!
12. Credit for the Elderly or Disabled
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If you’re 65 or older or permanently disabled with low income, you might qualify for this lesser-publicized credit. It’s worth as much as $7,500, although there are strict eligibility requirements. If you’re within the income limit, it’s a great bonus!
13. Foreign Tax Credit
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Do you have income earned from abroad? You may be eligible for this credit, which avoids double taxation. It can be applied to wages, investments, and even rental income earned abroad!
14. Mortgage Interest Credit
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Some first-time homebuyers with a Mortgage Credit Certificate (MCC) can claim this credit. It’s worth up to $2,000 annually and directly lowers taxes owed. If you’re buying a home, check if your state offers an MCC program!
15. Work Opportunity Tax Credit (WOTC)
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Employers who hire veterans, ex-felons, or long-term unemployed employees can receive a credit of up to $9,600 per employee. This makes you a better job candidate from these groups. Companies can increase their staff and reduce taxes!
16. Plug-In Hybrid Vehicle Tax Credit
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Not quite prepared for a complete EV? Plug-in hybrids may also be eligible for a lesser tax credit. The credit will vary depending on the battery capacity and model vehicle, so verify with the IRS first!
17. Health Coverage Tax Credit (HCTC)
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You may be eligible if you were laid off because of trade or receive a Pension Benefit Guaranty Corporation pension. This credit subsidizes 72.5% of your health insurance premiums. It’s a lifesaver for displaced workers who need coverage!
18. Self-Employed Health Insurance Deduction (Bonus Deduction, Not a Credit)
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Although not a credit, the self-employed may deduct 100% of premiums paid for health insurance, including medical, dental, and long-term care insurance. This is an above-the-line deduction that directly reduces taxable income!
19. Employer-Provided Childcare Credit
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Companies that provide childcare benefits to their employees qualify for a tax credit of up to $150,000 annually. This allows businesses to provide on-site childcare or childcare subsidies. Employees save money, and employers save on taxes!
20. Research and Development (R&D) Tax Credit
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This generous credit is available to companies that invest in new technology, software, or innovation. It is one of the largest tax incentives for businesses and spurs U.S. innovation. Even startups with zero taxable income can use it to reduce payroll taxes!