There is good news (possibly) coming for American taxpayers, as the House Republicans passed a bill in late May raising the child tax credit to $2,500.
This change is part of President Donald Trump’s multitrillion-dollar spending package. The $2,000 maximum credit, established in 2017, would be made permanent and temporarily increased between 2025 and 2028. Let’s take a closer look at the details of this plan, which, if passed, would benefit tens of millions of American families.
Increased Child Tax Credit: up to $2,500 per qualifying child
The Representatives’ bill establishes that the child tax credit would ideally increase to $2,500 per eligible child starting in 2025 and continuing through 2028. However, it would not help low-income families. “It does nothing for the 17 million children who are left out of the current $2,000 credit,” said Kris Cox, director of Federal Tax Policy at the Center on Budget and Tax Priorities.
Cox says the bill would not benefit low-income families, but this could be amended if the provision is amended in the Senate. Republicans introduced this plan as part of their fiscal agenda, extending measures from the 2017 Tax Cuts and Jobs Act.
Families that would be excluded from the expanded CTC
Very low-income families don’t pay federal taxes, which prevents them from accessing the full credit. The proposal requires both parents to have a Social Security number to claim the child tax credit on joint returns. This affects millions of eligible children.
Without congressional action, the child tax credit would return to $1,000 after 2025. The House proposal sets it at $2,000 permanently and raises it to $2,500 for three years. After 2028, the credit would return to $2,000 and be adjusted for inflation.
What is a Child Tax Credit, and how does it work?
The federal benefit known as the Child Tax Credit (CTC) is a tax credit that the U.S. government offers to taxpayers who have children considered “qualifying.” This tax credit directly reduces the federal tax burden, especially income tax, that an individual or family must pay at the end of the fiscal year.
In some fortunate cases, if the credit exceeds the amount of taxes owed to the Internal Revenue Service (IRS), taxpayers may receive a tax refund, known as the Additional Child Tax Credit (ACTC).
The spirit of CTCs’ existence is to ease the financial burden on families raising children in the United States, and help these households meet basic needs such as education, childcare, food, and housing.
How to calculate a CTC, and what are the requirements to receive it?
For 2025, the child tax credit has a maximum value of $2,000 per child under age 17 with Social Security. Up to $1,700 is refundable if the credit exceeds the taxes owed. The value is 15% of adjusted gross income after the first $2,500, up to $2,000 per child.
The tax credit is reduced if adjusted gross income exceeds $400,000 for married couples or $200,000 for other taxpayers. “Almost everyone understands this,” Elaine Maag told CNBC, noting that middle-income families currently receive larger benefits.
In February 2024, a bipartisan House bill attempted to expand access to the child tax credit and increase its refundable portion for 2023. This plan failed in the Senate in August, despite some Republicans’ interest in revising it.
