Is a bigger Child Tax Credit on the way? Here’s who it would benefit
House Republicans have included a boost to the Child Tax Credit in their proposed spending package legislation but not everyone will see the benefits.
Americans are starting to get a look at the Republicans’ plans to extend the tax cuts from President Donald Trump’s first term in office along with additional tax breaks. A proposed bill was passed by the House Ways and Means Committee that would make some of the 2017 Tax Cuts and Jobs Act provisions permanent like the increased Child Tax Credit.
That legislation doubled the amount taxpayers could claim per child from $1,000 to $2,000. Furthermore, the spending package, that House Speaker Mike Johnson wants to send to the Senate by Memorial Day, includes a provision to increase the maximum amount to $2,500 through 2028.
The legislation still needs to get through both chambers of Congress and could face modifications during the legislative process, but this is what we know so far.
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Who will be eligible for $2,500 Child Tax Credit?
The Urban-Brookings Tax Policy Center notes that the change “would primarily benefit middle- and higher-income families.” That’s because of the earnings phase-in rules families must meet which prevents many low-income families from claiming the full credit affecting around 17 million children, or 25% of all kids in the US.
These families could see an average increase of over $350 to the amount that they can claim, “half the amount of beneficiaries with higher incomes,” according to the nonpartisan think tank.
One of the major changes to the Child Tax Credit besides getting a dollar amount increase is that the bill also requires that both parents have Social Security numbers if filing jointly in order to claim the tax credit for an eligible child.
“This bill is taking the child tax credit away from 4.5 million children who are U.S. citizens or lawfully present,” Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities told CNBC.
The draft legislation doesn’t provide any further details about changes to the structure of the Child Tax Credit.
The current structure of the Child Tax Credit prevents 17 million children—in families who earn too little—from receiving the full credit. https://t.co/ENlqM2XI7r pic.twitter.com/UbegIaw7D6
— Tax Policy Center (@TaxPolicyCenter) May 14, 2025
What is the current Child Tax Credit?
The current Child Tax Credit allows taxpayers with eligible children to claim up to $2,000 per child in 2024. Without any action that will revert to $1,000 this year.
The Child Tax Credit is available to taxpayers with dependents under 17 at the end of the tax year in which the credit is claimed and who meet certain eligibility requirements.
The credit is partially refundable, and there is an earnings threshold to start claiming the ‘refundable’ portion known as the ‘Additional Child Tax Credit’.
Taxpayers who owe less in taxes than the refundable amount will have it added to their tax refund, and the non-refundable portion will reduce taxes owed dollar-for-dollar. To claim a refund, filers must complete Schedule 8812.
Currently, parents of eligible children must have an adjusted gross income (AGI) of less than $200,000 for single filers and $400,000 for married filing jointly to claim the full credit. For every $1,000, or fraction thereof, over those thresholds, the credit is reduced by $50.
For lower-income Americans, they must have an income of at least $2,500 to be eligible for the refundable portion of the credit. The amount that can be claimed is a portion of earnings above that threshold.
To calculate how much can be claimed, you need to subtract $2,500 from your “earned income”, for example, Social Security benefits and unemployment compensation do not count, and then multiply that number by 15 percent.
Child Tax Credit eligibility requirements for children
Besides the under 17 age requirement, the child must be eligible to be claimed as a dependent on the taxpayer’s return and live at the same residence as the taxpayer for more than half the year. The child cannot provide more than half of their own financial support during the tax year.
The child must have a valid taxpayer identification number in the form of a work-authorized Social Security number (SSN).
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