20 — 15% of Earned Income Over Threshold Updated for tax year 2025

What this line means

Fifteen percent of your earned income over $2,500 from line 19. This is the earned income method for computing the additional child tax credit. The result sets a limit on how much of the excess CTC can be refunded. For example, if you earned $22,500 over the threshold, 15% produces $3,375 — meaning up to $3,375 of excess CTC could be refunded (subject to the per-child cap).

Does this apply to you?

• You have earned income over $2,500 and are computing the refundable additional child tax credit
• You need to compare this earned income method against the excess CTC and per-child cap

Easy to overlook

Higher earned income produces a larger refundable credit The 15% rate means every additional $1,000 of earned income above $2,500 adds $150 to the potential refundable credit. A family earning $30,000 with two children and a $4,400 CTC ($2,200 per child) can get up to $3,400 refunded (limited by the $1,700-per-child ACTC cap). Filers who increase their earned income — by working more hours or reporting all self-employment income — directly increase this credit. ¹ [SOURCE: IRC Section 24(d)(1)(B)(i) — 15% computation]

This amount is still limited by the per-child cap Even if 15% of your earned income produces a large number, the additional child tax credit cannot exceed line 17 (qualifying children times $1,700) or line 15 (the excess credit over tax). The 15% figure is one of several limits — the smallest one controls. ² [SOURCE: IRS Schedule 8812 instructions — line 20 calculation]

Watch out for this

Using 15% of total earned income instead of 15% of earned income over $2,500. The $2,500 is subtracted first on line 19, then you multiply by 15%. Applying 15% to total earned income inflates the result and overstates the refundable credit.

Related lines on your return

• Line 19 — Schedule 8812 — Earned income over $2,500; multiplied by 15%
• Line 17 — Schedule 8812 — Maximum additional credit; per-child cap
• Line 22 — Schedule 8812 — Larger of this method or the three-or-more-children method