A monthly tax credit is a federal tax benefit paid out in regular installments during the year instead of as a single lump sum at tax time. In 2026, the only one the federal government still runs on a monthly basis is the advance Premium Tax Credit, which goes straight to your health insurer each month to lower what you pay for marketplace coverage. The monthly Child Tax Credit that families received in the second half of 2021 has not been renewed, and the current Child Tax Credit is claimed once a year on your return.
The Advance Premium Tax Credit
The advance Premium Tax Credit is the monthly payment mechanism still in effect. It does not land in your bank account. The IRS sends it directly to your health insurance company, and it reduces your monthly premium for a plan you bought through the health insurance marketplace.1Internal Revenue Service. Premium Tax Credit (PTC) Overview
Who Qualifies
To be eligible, your household income generally has to fall between 100% and 400% of the federal poverty line for your family size, and you must be enrolled in a marketplace plan.2Internal Revenue Service. Eligibility for the Premium Tax Credit The temporary expansion that removed the 400% income cap ran from tax year 2021 through 2025 and is not available for 2026.3Office of the Law Revision Counsel. 26 U.S. Code 36B – Refundable Credit for Coverage Under a Qualified Health Plan You also cannot be eligible for affordable employer-sponsored coverage, Medicare, Medicaid, or other government health programs.
How the Monthly Payments Work
When you sign up for marketplace coverage, you give the marketplace an estimate of your household income for the coming year. That estimate drives the calculation of how much Premium Tax Credit you’re likely eligible for. You then decide how much of it to take in advance: the full amount, part of it, or none.1Internal Revenue Service. Premium Tax Credit (PTC) Overview Taking the full advance means the lowest possible monthly premium. Taking none means paying the full premium each month and claiming the whole credit on your tax return.
The 2026 Repayment Rule
Because the monthly payments are based on an income estimate, the numbers get squared up at tax time. If your actual income comes in higher than you estimated, you may have received more credit than you qualified for, and you have to pay the difference back. For 2026, there is no repayment cap: you must repay the full excess.4Internal Revenue Service. Updates to Questions and Answers About the Premium Tax Credit In earlier years, lower-income households had their repayment amounts limited. That protection is gone, so an accurate income estimate matters more than it used to. If your income comes in lower than expected, you’re on the other side of the ledger and get the additional credit as part of your refund.
Reconciling on Form 8962
Anyone who received advance Premium Tax Credit payments during the year has to file Form 8962 with their annual tax return to reconcile the advance amounts against the credit they actually qualified for.5Internal Revenue Service. 2025 Instructions for Form 8962 If you took advance payments and skip this form, the IRS will hold up your return and likely send you a letter.
The 2021 Monthly Child Tax Credit Is Not Coming Back Automatically
Most people asking about a monthly tax credit are thinking of the advance Child Tax Credit payments from 2021. Under the American Rescue Plan Act, the IRS sent half of a family’s estimated Child Tax Credit in six monthly installments from July through December 2021, generally on the 15th of each month, with direct deposits appearing as “IRS TREAS 310 CHILDCTC” on bank statements.6Internal Revenue Service. 2021 Child Tax Credit and Advance Child Tax Credit Payments – Topic E: Advance Payment Process of the Child Tax Credit Families claimed the remaining half on their 2021 return.
Congress did not extend the monthly payment structure past December 2021, and the Child Tax Credit Update Portal that families used to manage those payments is no longer available.7Internal Revenue Service. 2021 Child Tax Credit and Advance Child Tax Credit Payments – Topic A: General Information The Treasury Department said at the time that monthly payments would end unless lawmakers acted.8U.S. Department of the Treasury. Treasury and IRS Disburse Fourth Month of Advance Child Tax Credit No extension passed.
How the Child Tax Credit Works Now
The Child Tax Credit still exists. It’s just annual. For the 2025 tax year, it’s worth up to $2,200 per qualifying child, with a refundable portion of up to $1,700 through the Additional Child Tax Credit for families whose tax liability is too small to absorb the full credit.9Internal Revenue Service. Child Tax Credit10Internal Revenue Service. Refundable Tax Credits You claim it on Schedule 8812 with your Form 1040.11Internal Revenue Service. Instructions for Schedule 8812 (Form 1040) (2025) The credit begins to phase out when modified adjusted gross income exceeds $200,000, or $400,000 for married couples filing jointly.
One caveat about 2026: several provisions of the Tax Cuts and Jobs Act that set the current credit amount and income thresholds are scheduled to expire after 2025. If Congress does not extend or replace them, the credit could revert to $1,000 per child with lower phase-out thresholds.
One filing detail worth knowing: if your return claims the Additional Child Tax Credit, the IRS cannot issue your refund before mid-February of the following year, no matter how early you file. That hold applies to the whole refund, not just the credit portion.11Internal Revenue Service. Instructions for Schedule 8812 (Form 1040) (2025)
Do These Payments Count Against Other Federal Benefits
If you get SNAP, Medicaid, housing assistance, or another means-tested federal benefit, refund and advance payments of a refundable tax credit are not counted as income, and they are excluded from countable resources for 12 months after you receive them, in any federal program or federally funded state program.12Office of the Law Revision Counsel. 26 U.S. Code 6409 – Refunds Disregarded in the Administration of Federal Programs and Federally Assisted Programs The rule applies whether the money arrives as a lump-sum refund or a monthly advance.
The 12-month clock does matter. A large refund still sitting in a bank account after a year can count as a resource for means-tested programs. Spending or moving the money within the window avoids the problem. If you’re not sure how a specific payment affects your case, your benefit coordinator can confirm.
Whether Monthly Child Tax Credit Payments Will Return
Several bills in Congress would bring back or replace monthly child tax credit payments. The American Family Act would have the IRS send monthly payments with month-by-month eligibility. The FISC Act would route monthly payments through the Social Security Administration. Neither had been enacted as of early 2026, and the broader fight over expiring tax provisions makes the timing unpredictable. If a monthly payment is part of your planning, watch for legislation, but budget around the annual credit that exists now.