such applicable taxable year. (B) Limitation on initial reduction In the case of any calendar month beginning before January 1, 2026, the amount of the reduction under subparagraph (A) shall not exceed the lesser of— (i) the excess (if any) of— (I) the monthly specified child allowance with respect to the taxpayer for such calendar month (determined without regard to this paragraph), over (II) the amount which would be determined under subclause (I) if the dollar amounts in effect under subparagraphs (A) and (B) of paragraph (1) were each equal to $166.67, or (ii) 1/12 of 5 percent of the excess of the secondary threshold amount over the initial threshold amount. (C) Secondary reduction In the case of any calendar month beginning before January 1, 2026, the monthly specified child allowance otherwise determined under paragraph (1) with respect to any taxpayer for such calendar month (determined after the application of subparagraphs (A) and (B)) shall be reduced (but not below zero) by 1/12 of 5 percent of the excess (if any) of the taxpayer’s modified adjusted gross income for the applicable taxable year over the secondary threshold amount. (D) Definitions related to limitations based on modified adjusted gross income For purposes of this paragraph— (i) Initial threshold amount The term initial threshold amount means— (I) $150,000, in the case of a joint return or surviving spouse (as defined in section 2(a)), (II) 1/2 the dollar amount in effect under subclause (I), in the case of a married individual filing a separate return, and (III) $112,500, in any other case. (ii) Secondary threshold amount The term secondary threshold amount means— (I) $400,000, in the case of a joint return or surviving spouse (as defined in section 2(a)), (II) $300,000, in the case of a head of household (as defined in section 2(b)), and (III) $200,000, in any other case. (iii) Applicable taxable year The term applicable taxable year means, with respect to any taxable year for which the credit under this section is determined— (I)