Dependent Credit Phaseout

Category: tax

The income levels at which a taxpayer loses the ability to claim credits for their children or dependents.

Many tax benefits (like the Child Tax Credit) are phased out as your income grows. Once you pass the IRS-defined AGI threshold, your $2,000 credit per child begins to disappear. This is a primary driver of effective marginal tax rate increases for middle-class families.

Common Examples

• Due to the dependent credit phaseout, our effective tax rate jumped significantly as our combined household income crossed the $400k mark.
• Tax professionals monitor the dependent credit phaseout carefully to see if additional pre-tax savings can pull a family back under the limit.