If a taxpayer's modified adjusted gross income exceeds certain limits, what is a common impact on the Child Tax Credit?

When a taxpayer's modified adjusted gross income exceeds specified thresholds, the Child Tax Credit experiences a phase-out. This means that as the taxpayer's income rises above these limits, the amount of the credit is gradually reduced. The phase-out is designed to target the credit to families that are most in need of financial assistance, and it ensures that high-income earners do not benefit from the credit to the same extent as lower or middle-income families.

By structuring the credit this way, the tax system can balance support for families with children while also considering the ability of higher-income earners to afford child-related expenses without as much assistance. The phase-out effectively means that for taxpayers who exceed the income limits, they will receive a reduced amount of credit, rather than no credit at all or an increased credit.

This mechanism helps to ensure that the Child Tax Credit remains a tool for alleviating financial burdens specifically for those who qualify based on their income level.