In 2025, the Child Tax Credit will be increasing, helping more families reduce their tax burden and possibly get bigger refunds.
This move, led by the IRS, aims to make life a bit easier for families, especially as the cost of raising children continues to rise.
Along with this, the IRS is expanding its free Direct File program, making it simpler for people to file taxes.
Expansion of the Child Tax Credit:
Starting in 2025, the Child Tax Credit will be available to more families, meaning that more people will benefit from lower taxes or larger refunds. The credit directly reduces the amount of taxes owed, which is different from just lowering taxable income.
This is especially helpful for families struggling with rising costs. In the past few years, the IRS has expanded this program to assist more people, making it easier for them to get the help they need.
IRS’s Direct File Program:
The IRS is also rolling out the Direct File program, which will make tax filing simpler and free for many people. This program began in 2024 in 12 states and will be available in 24 states by 2025.
Direct File is designed for individuals with simple tax returns, such as those who earn wages, receive Social Security benefits, or have unemployment benefits.
In the pilot phase, over 140,000 people used Direct File successfully, and many completed their taxes in under an hour. This tool ensures accuracy and helps users get the maximum refund possible.
New Options for Credits and Deductions:
In 2025, Direct File will also allow taxpayers to claim additional credits and deductions, including:
- Child and Dependent Care Credit
- Credit for the Elderly or Disabled
- Health Insurance Premium Tax Credit
Taxpayers will also be able to subtract payments made to Health Savings Accounts (HSAs), educational costs, and student loan interest. These updates aim to make it easier for people to maximize their refunds without needing to pay extra for tax advice.
Who Will Benefit the Most?
The biggest beneficiaries of these changes will be working families. The expanded Child Tax Credit and Direct File program will make it easier for them to file taxes and access credits and refunds without the need for expensive tax preparation services.
However, it’s important to note that if you need to itemize deductions (such as for large medical bills, charitable donations, or property taxes), you won’t be able to use Direct File for now. The IRS is working to improve the program for future use.
Improved Customer Service:
To make the tax filing experience even better, the IRS is improving customer support for those using Direct File. Starting in 2025, taxpayers can get live chat help in both English and Spanish while they file their taxes.
In addition, the IRS is improving the process for verification and authentication to provide more detailed answers to tax questions. Taxpayers will also be able to get technical support or talk about general tax inquiries.
These changes show that the IRS is working to make tax filing easier and more accessible, especially for families who may have found it difficult or confusing in the past.
With the Child Tax Credit expansion and the growth of the Direct File program, more people can file their taxes for free and receive the credits and deductions they deserve, helping them keep more of their hard-earned money.
What is the Child Tax Credit?
The Child Tax Credit helps families pay less in taxes and can increase their tax refunds. In 2025, it will be available to more families, providing extra financial help.
How does the Direct File program work?
The Direct File program lets people with simple tax returns file their taxes for free and get help directly from the IRS, ensuring they receive the biggest refund possible.
Can I still get the Child Tax Credit if I don’t use Direct File?
Yes, you can still receive the Child Tax Credit even if you do not use the Direct File program, as long as you meet the eligibility criteria.
Who can use the Direct File program?
The Direct File program is for people with simple tax returns, such as those who earn wages, receive Social Security benefits, or get unemployment benefits.
Will there be more credits available in 2025?
Yes, in 2025, the Direct File program will allow people to claim more credits, such as the Child and Dependent Care Credit, the Credit for the Elderly or Disabled, and the Health Insurance Premium Tax Credit.
