The Child Tax Credit
Supporting Working Families
The Child Tax Credit recognizes the cost of raising kids
Congress is considering boosting the size of the Child Tax Credit from $2,000 to $2,500;
a move that could help millions of families across the U.S.
But designing CTC expansion should be done carefully, ensuring that working-class families also benefit from the provision in the tax code that directly recognizes the costs borne by parents, and the need to support strong families as the backbone of a healthy society.
The Child Tax Credit
The Child Tax Credit is the part of the tax code that directly recognizes the costs that parents bear in raising children. Signed into law as a bipartisan measure in 1997, then expanded in 2001, 2003, 2009, and 2017, the Child Tax Credit is widely recognized as helping support parents with the cost of child care, diapers, food, and other essentials.
For some families, the design is straightforward - for families with high enough federal income tax liability, the Child Tax Credit takes $2,000 per child off of their taxes owed. A family of four that would otherwise owe $6,000 at tax time will be able to bring that burden down to $2,000, for example.
Yet families without sufficient tax liability - such as those with a single wage earner and a parent at home - may find themselves unable to claim the full amount of the Child Tax Credit. While “One, Big, Beautiful Bill” would expand the top-line value of the credit, it could - without further changes - mean more families are left out of the credit’s full value.
Ensuring the Child
Tax Credit Supports Families from All Walks of Life
Expanding the top-line value of the Child Tax Credit benefits many families, but not those in the bottom income brackets. Roughly one in three children nationwide live in households that will not see an increase in their Child Tax Credit without changes to the refundable portion of the credit.
Under current policy, a married couple with two kids needs at least $36,000 in income to qualify for the full $2,000 per child tax credit. If the credit were to be expanded to $2,500 per child, that same family would need to earn at least $48,000 in income to qualify for the full credit. Families whose household income is between $40,000 and $50,000 will see, on average, tax benefits increased by less than half than those making over $200,000.
To learn more, visit our FAQ.
Average benefit from increasing Child Tax Credit to $2,500
Getting New Parents Up-Front Assistance
Around childbirth, families’ incomes often take a hit while their expenses go up. A $2,000 per-parent bonus, delivered around the time a child’s social security card is issued rather than waiting for filing for a tax return next year (or, in the case of tax-advantaged savings accounts, decades hence) can deliver new parents support when they need it most.