What Every Tax Pro Should Know About Individual Tax Credits for 2025 Filers

As tax season approaches, individual tax credits — some enhanced or continued from recent tax law changes — remain one of the most impactful ways clients can reduce their tax liability and boost refunds. A tax credit offers a dollar-for-dollar reduction in tax owed, and many are refundable, meaning the taxpayer can receive money back even if they don’t owe any tax.

Below is a concise breakdown of the key credits your clients are most likely to encounter — plus tips you can use to identify opportunities and avoid common pitfalls.

Core Tax Credits for Individuals

✅ Child Tax Credit (CTC)

• Helps families with qualifying children.

• For 2025, the credit amount is up to $2,200 per qualifying child.

• Important to consider both the nonrefundable portion and the refundable Additional Child Tax Credit (ACTC), up to $1,700 per child.

  
  

Tax Pro Tip: Encourage clients to double-check Social Security numbers and dependent eligibility early — errors here are a major driver of delays and notices.

🧒 Child and Dependent Care Credit

• Provides a dollar-for-dollar reduction in tax liability for care expenses incurred so taxpayers can work or look for work.

  
  

Helpful Hint: This can be especially valuable for clients balancing work and caregiving, including care for elderly dependents.

🏦 Saver’s Credit

• Designed to reward retirement savings for moderate- and lower-income clients with a credit up to $1,000 (or $2,000 if married filing jointly).

  
  

Best Practice: Review retirement contributions made prior to year-end to maximize the client's retirement savings and their credit potential.

💸 Refundable and Partially Refundable Credits

These credits can increase a client’s refund even if they owe little or no tax:

⭐ Earned Income Tax Credit (EITC)

• One of the most powerful anti-poverty tax provisions. It supports low- to moderate-income workers and families.

  
  

Thousands of eligible taxpayers do not claim the EITC, often because they aren’t required to file or misinterpret eligibility criteria. This presents a key planning opportunity for preparers to boost client outcomes.

🏥 Premium Tax Credit

• Available for clients who purchased health coverage through the Marketplace and meet eligibility requirements.

  
  

Pro Tip: Carefully reconcile advance premium tax credit payments with Form 8962 to avoid surprises — especially for clients whose income changed during the year.

👨‍👩‍👧 Adoption Tax Credit

• Offers up to $17,280 per eligible child for qualified adoption expenses, with a refundable portion up to $5,000.

  
  

This credit can be a game-changer for adoptive families navigating medical, legal, and agency costs.

🎓 American Opportunity Tax Credit (AOTC)

• Helps offset the cost of undergraduate education: up to $2,500 per student, with up to $1,000 refundable.

  
  

Reminder: Phaseouts based on modified adjusted gross income still apply and should be factored into eligibility analysis.

⛽ Fuel Tax Credit

• A niche but refundable credit available to taxpayers using fuel for off-highway business or farming purposes.

  
  

This rarely claimed credit can be missed if you’re not asking the right questions — especially for self-employed and small business clients.

📌 Recordkeeping and Due Diligence

• The IRS emphasizes the importance of strong documentation to support claims for credits.

• Be on guard for scam promoters who guarantee inflated refunds by misusing credits — a risk that can lead to audit exposure.

  
  

🧠 Final Thoughts for Tax Pros

Tax credits are more than just line items — they’re powerful tools that can significantly advance client tax outcomes when understood and applied correctly. Keep an eye on evolving legislation (like changes from recent bills often dubbed in media as the “One Big Beautiful Bill”), as updates continue to affect credit amounts and eligibility.

Your proactive review of client situations this tax season — especially for refundable credits — could mean thousands of dollars in benefit and a big win for client satisfaction.

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Disclaimer: This article is for informational and educational purposes only and does not constitute legal tax advice. Advanced Tax Solutions is not liable or responsible for any damages resulting from or related to your use of this information. It is your responsibility to refer to official IRS documentation for information regarding any tax laws or tax information shown here.