Tax Benefits for Dependents: 5 Credits to Help You Save on Your Taxes

If you have dependents, there are several tax benefits that can significantly reduce or even eliminate your tax bill.

Even though the dependent exemption was eliminated under the One Big Beautiful Bill Act (OBBBA), there are still some tax benefits you can take advantage of. Whether you have kids under 17 or a student you’re supporting through college, you should familiarize yourself with any credits you might be eligible for to maximize your tax refund.

In this guide, we’ll outline the tax benefits of having dependents, what to consider when filing, and how to optimize your tax planning based on your family.

Key Takeaways

• If you have dependents, there are a few tax credits you might qualify for, such as the Child Tax Credit, education credits, and the Earned Income Tax Credit.
• Tax credits are directly subtracted from the total you owe.
• If the credits you qualify for amount to more than you owe, you may receive a tax refund.
• Tax credits may change year over year or might be impacted by tax reform, so it’s important to review the most recent requirements and credit amounts before filing.

Which tax benefits are available for taxpayers with dependents?

Tax benefits for having dependents are usually tax credits. These are some of the most common credits you might qualify for:

Child Tax Credit

You may be eligible for the Child Tax Credit, which is a tax credit that you get for your dependent kids. It’s even better than a tax deduction because it reduces your taxes dollar-for-dollar.  For tax year 2025, the Child Tax Credit is worth up to $2,200 per qualifying child under age 17.

With the passage of the OBBBA, this credit has been expanded for the coming years. For tax year 2025 (the taxes you file in 2026), the Child Tax Credit has been increased to up to $2,2000 per qualifying child. For tax years 2026 and forward, the credit will be adjusted for inflation on an annual basis. 

You may be eligible for the full credit if your modified adjusted gross income (MAGI) is $400,000 or under for those who are married filing jointly and $200,000 or under for all other filers. For tax year 2025, $1,700 of this credit is refundable.

Other Dependent Credit

If you don’t qualify for the Child Tax Credit because your dependent child is over 16, or if you support a friend or a relative, you may still be able to claim the Other Dependent Credit of up to $500 per qualifying person.

The credit begins to phase out if your adjusted gross income is greater than $200,000 (or $400,000 for married filing joint couples). For tax year 2025, this credit is nonrefundable. 

Child and Dependent Care Credit

If you pay for childcare, there is a tax credit that you may qualify for at tax time. If you’re working or actively seeking work, and you pay childcare for your dependent who is under the age of 13 (no age limit if disabled), you may be able to claim the Child and Dependent Care Credit.

The types of eligible child care expenses include:

• Nursery school
• Private kindergarten
• After-school programs
• Daycare
• Summer and winter day camps

This credit is a dollar-for-dollar reduction of your taxes based on your childcare expenses and is a nonrefundable credit. 

• The expense limit for tax year 2025 is $3,000 for one qualifying individual and $6,000 for two or more qualifying individuals. 
• The percentage used to calculate the credit is up to 35% of expenses, so the maximum credit is up to $1,050 for one qualifying individual or up to $2,100 for two or more qualifying individuals. 
• This credit is reduced for taxpayers with income over $15,000. 

Earned Income Tax Credit (EITC)

There’s a special tax credit available if your wages or self-employment income are below a certain income level. The amount of credit you receive is based on your income, filing status, and how many qualifying children you have.

The refundable tax credit you can receive ranges from a maximum of $8,046 if you have three or more children to $649 if you have no children for tax year 2025.

Unlike some other tax credits, the Earned Income Tax Credit is refundable, so if the credit is greater than the tax you owe, you can still receive the difference as a tax refund.

Education tax credits

If you’re helping put your child (or another qualifying dependent) through college, it can come with a lot of expenses, but fortunately, there are two credits you might be able to claim on your return.

American Opportunity Tax Credit (AOTC)

The American Opportunity Tax Credit (AOTC) is a refundable tax credit that’s worth up to $2,500, with up to $1,000 of the credit refundable, per eligible student. This can help cover necessary expenses like books, supplies, and tuition.

There are income limitations, though:

• For single filers: Your MAGI must be $80,000 or less to claim the full credit, or between $80,001 and $90,000 for a partial credit.
• For couples who are married filing jointly: Your MAGI must be $160,000 or less to claim the full credit, or between $160,001 and $180,000 for a partial credit.

If your MAGI exceeds these thresholds, you can’t claim the AOTC. There are also other requirements you’ll need to keep in mind when evaluating your eligibility. To qualify, students must:

• Be in their first four years of higher education
• Be pursuing a degree or other recognized educational credential 
• Be enrolled at least half-time for a minimum of one academic period (beginning in the applicable tax year)
• Not have claimed the AOTC (or the former Hope credit) for more than four years
• Not have a felony drug conviction at the end of the tax year

To claim this credit, students must have received a 1098-T, Tuition Statement, from the educational institution they attend. There are exceptions to this rule if your dependent is a qualified resident alien, or:

• Has qualified education expenses paid entirely with scholarships or a formal billing arrangement
• Is enrolled in courses for which no academic credit is awarded
• Their educational institution isn’t required to provide a 1098-T

Lifetime Learning Credit (LLC)

The Lifetime Learning Credit (LLC) can help cover tuition and expenses for students who are enrolled in an undergraduate or graduate degree, as well as professional degree courses for at least one academic period beginning in the tax year.

So, how much is it worth? The LLC is 20% of your first $10,000 spent on qualified education expenses, such as tuition, with a maximum of $2,000. The credit is nonrefundable.

Similar to the AOTC, income limits apply:

• If your MAGI is less than $80,000 (single filers) or $160,000 (married couples filing jointly), you can claim the full credit.
• If your MAGI is between $80,000 and $90,000 (single filers), or $160,000 and $180,000 (married couples filing jointly), the credit is gradually phased out, and you’ll receive a partial credit.

Taxpayers with an AGI over these limits can’t claim the LLC.

To claim this credit on your student’s behalf, they must be listed as a dependent on your tax return. Additionally,  you, your dependent, or a third party must pay for qualified expenses at an eligible educational institution that they’re enrolled in.

Recent tax reform that impacts taxpayers with dependents

There are a few tax law updates that might impact you if you’re claiming dependents this year.

Permanent elimination of the dependent exemption

The dependent exemption was temporarily suspended by the Tax Cuts and Jobs Act (TCJA) in 2017, but it was expected to return in 2026 when the TCJA expired. However, it was permanently eliminated with the OBBBA, which passed in July 2025.

Expansion of the Child Tax Credit

The OBBBA expanded the CTC, increasing the maximum credit to $2,200 per child for tax year 2025. The credit will then increase annually for inflation starting in tax year 2026. Previously, it was limited to $2,000.

Increased standard deduction

The standard deduction was temporarily increased by a substantial amount by the TCJA in 2017, but this expansion has been made permanent by the OBBBA.

For 2025, the standard deduction is $15,750 for single filers, $23,625 for heads of households, and $31,500 for married couples filing jointly.

How do tax credits work when you file?

Tax credits are subtracted from your total tax liability dollar-for-dollar. Depending on how much you owe and the tax credits you’re eligible for, claiming them can significantly decrease your tax bill, resulting in owing nothing, or, if they’re refundable, putting money back in your pocket via a tax refund.

Get tax relief for some of your dependent expenses

With these tax credits, you can save on your tax bill and maybe even get a refund to help cover dependent expenses. The best part is, you don’t have to worry about remembering the rules come tax time. Our tax experts can help.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.