8 Tax Credits for 2025: How Much Can You Save?

A tax credit directly reduces your tax liability on a dollar-for-dollar basis. This makes it a better option than a tax deduction, which simply lowers your taxable income. In some cases, a tax credit is refundable, meaning that even if it exceeds your tax liability, you can receive the full amount of the credit in the form of a tax refund.

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Most tax credits are aimed at low-to-middle-income taxpayers, particularly those that have kids, attend school or save for retirement. But you can also earn credits for everything from buying your own health insurance on an exchange or making energy efficiency upgrades to your home.

Here’s a look at some of the most popular tax credits you may be able to claim in 2025.

Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is designed to assist low-income taxpayers with or without children. Those with children, however, might be entitled to larger credits.

To qualify for the EITC, you must meet certain qualifications, including the following:

• Earned income
• Investment income is allowed, below certain limits
• Valid Social Security number
• U.S. citizen or resident alien for the entire year
• Cannot file Form 2555, Foreign Earned Income.

For tax year 2024, the EITC ranged in value from $632 to $7,380. For 2025, you can earn between $649 and $8,046.

Learn More: American Opportunity Tax Credit: What Is It and Who Qualifies?

Child and Dependent Care Credit

The Child and Dependent Care Credit helps to relieve the burden on taxpayers who pay someone to care for their children while they work or look for work. To qualify, in addition to the above, you must:

• Live in the U.S. for more than half of the year
• Care for a dependent under age 13, a spouse or a dependent of any age, as long as they are incapable of self-care and they live with you for at least half of the year.

The credit is worth up to 50% of your qualifying expenses, with a maximum credit of $4,000 for one qualifying child and $8,000 for two or more.

Child Tax Credit

Not to be confused with the Child and Dependent Care Credit, the Child Tax Credit is for families with qualifying dependents. Qualifying individuals are defined as follows:

• Have a valid Social Security number
• Under age 17 at end of tax year
• Your daughter or son, step-relative, eligible foster child, sibling or descendant of one of these, like a grandchild
• Did not provide more than half of their own support in the tax year
• Lived with you for more than half of the tax year
• A dependent on your tax return
• A U.S. citizen or resident alien.

If you meet all of the eligibility criteria, you can net the full value of the Child Tax Credit for each qualifying child as long as your annual income isn’t more than $400,000 if you’re filing a joint tax return, or $200,000 otherwise. Those with higher incomes may be able to claim a smaller credit.

Savers Tax Credit

If you contribute to a retirement savings account and your income falls within certain limits, you can snag a very generous tax credit that often gets overlooked: the Savers Tax Credit. For contributions to plans ranging from traditional and Roth IRAs to 401(k), 403(b), 457(b), SARSEP and SIMPLE plans, you could get back 10%, 20% or even 50% of the amount you contribute in the form of a tax credit.

The AGI cutoff limits for the 2024 tax year were $76,501 for joint filers, $57,376 for heads of household and $38,251 for all other filers.

Lifetime Learning Credit

The Lifetime Learning Credit is a much broader tax credit that covers tuition and related expenses at nearly any educational institution. This includes undergraduate and graduate courses, along with any that provide job training or skills. The credit, worth up to $2,000 per tax return, applies to you, your spouse or a dependent listed on your return.

American Opportunity Tax Credit

The American Opportunity Tax Credit is an educational credit worth 100% of the first $2,000 you spend per qualifying student and 25% of the next $2,000, for a maximum per-student total of $2,500. If the credit exceeds your tax liability, up to 40% of the remainder, up to a maximum of $1,000, can be refunded to you.

A qualifying student must be in the first four years of a degree-granting program, with no felony drug convictions.

Healthcare Premium Tax Credit

The premium tax credit (PTC) helps eligible individuals and families reduce the cost of health insurance purchased through an exchange. You cannot be eligible for employer-provided health insurance.

The amount you receive is on a sliding scale, with the PTC decreasing as your modified adjusted gross income increases.

Energy Efficiency Credits

You can get a tax credit of up to $3,200 for making energy efficiency upgrades to your home. The credit amounts to 30% of qualifying expenses, including home energy audits, residential energy property and qualified energy efficiency improvements.

While the credit has no lifetime limit, there are annual limits on specific items: The limit for property costs and improvements is $1,200, including a $600 cap on exterior windows and skylights, $150 for home energy audits, and $250 per exterior door, up to a maximum credit of $500.

You’re allowed up to $2,000 per year for qualified water heaters, pump heaters or biomass boilers or stoves.

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This article originally appeared on GOBankingRates.com: 8 Tax Credits for 2025: How Much Can You Save?

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