The Child Tax Credit Could Be Worth Over $2,000 Under Republicans’ Spending Plan—But Millions Of Families Would Be Ineligible For Full Benefit
Republican lawmakers are pushing to boost the child tax credit as part of their budget reconciliation plan, with the House proposing a more generous version than the Senate.
However, despite the increase, millions of families would still be ineligible for the full benefit.
The child tax credit is a partially refundable credit for taxpayers with children or dependents under age 17. Currently, parents earning up to $200,000 annually can claim the full $2,000 per child through 2025. Without new legislation, that amount will drop back to $1,000 after the 2017 Tax Cuts and Jobs Act expires.
Both House and Senate versions of the bill seek to raise the maximum credit, though they differ on the amount. The House proposal would increase the credit to $2,500 per child, while the Senate version caps it at $2,200. Under the House plan, the $2,500 limit would remain through 2028, then fall to around $2,100, with future increases tied to inflation. The Senate plan also includes inflation adjustments starting in 2026. Both proposals maintain the refundable portion at $1,700.
Despite these potential increases, about 17 million children would still not qualify for the full credit, according to the Center on Budget and Policy Priorities. The key issue: the credit is not fully refundable. Beginning in 2025, families earning less than $2,500 won’t receive any portion of the credit. Those making more than $2,500 may be eligible for the refundable portion—up to $1,700—if their tax liability doesn’t consume the full credit.
Roughly two million children live in households earning too little to qualify for the credit at all, while another 15 million receive only a partial benefit because their families earn just enough to qualify for some, but not all, of the credit.
Tightened Eligibility Rules Remain
Both House and Senate proposals keep a rule from 2018 requiring children to have Social Security numbers (SSNs) to qualify. When that rule was enacted, about 1 million children became ineligible. The House bill goes further, proposing that both parents must have SSNs to claim the credit. The Senate version would require just one parent to have an SSN.
Another key difference: currently, married couples filing separately can claim the credit. The House plan would eliminate this option, while the Senate plan preserves it.
Under the House proposal, the number of children with SSNs who would not receive the full benefit could rise to over 26 million, the Tax Policy Center estimates.
The future of the proposal is uncertain. There are conflicting reports on whether Senate Republicans have enough support to pass the measure. President Donald Trump is urging quick action, pushing for the bill to reach his desk by July 4. Senate Majority Leader John Thune (R-S.D.) has said that deadline will be met.
Source: CNBC
