Election Results Are In: What Can We Expect to See from the Child Tax Credit?

By: Mathena Jencka, Class of 2027

Introduction

In 2017, President-elect Donald Trump signed the Tax Cuts and Jobs Act (TCJA), which is set to expire on December 31, 2025.[1] The TCJA was the largest tax code overhaul in the past three decades. It included provisions that permanently lowered the corporate tax rate, temporarily reduced individual tax rates, and raised the Child Tax Credit (CTC).[2] While there are disagreements between Democrats and Republicans regarding the TCJA, generally, the parties have shared interests in the provisions, notably regarding the CTC, which was doubled by the TCJA.[3] A 2023 poll from First Five Years Fund found that 66% of Republicans and 81% of Democrats support measures to increase the child tax credit, with voter support at 78%.[4] If the majority of both parties support the increase of the CTC, what measures can we expect to see from President-elect Donald Trump in his upcoming term?  

The History of the Child Tax Credit

The Child Tax Credit (CTC) was initially enacted with bipartisan support in 1997 and has proven to be one of the most effective tools for lowering child poverty.[5] When the CTC was introduced, the credit was $400 per child under seventeen years of age and nonrefundable for most families. This means that the amount one owed in taxes was reduced, rather than being paid a refund if tax liability fell beneath zero.[6] Over the years, the CTC amount has increased and became refundable. The refundable portion is also known as the Additional Child Tax Credit, meaning that if the credit exceeds the taxes owed, the taxpayer can receive the additional credit.[7] Further, in 2017, the Tax Cuts and Job Act (TCJA) doubled the CTC to $2,000, limiting the refundable amount to $1,400 per child, and implementing “phase-out thresholds and rates” for taxpayers with higher incomes.[8] President Biden’s American Rescue Plan Act of 2021 expanded the CTC for the 2021 tax year to be fully refundable, offering $3,600 per child under the age of six and $3,000 per child up to age seventeen.[9] However, the CTC reverted back to $2,000 per child for the 2022, 2023, and 2024 tax years.[10] For tax years 2022-2024, the phaseout began with an income of $200,000 and a joint income of $400,000, meaning taxpayers with this income level would not receive the benefits.[11]

The Social Benefits and Implications of the Child Tax Credit

The Child Tax Credit (CTC) offers a variety of social benefits, including a reduction in poverty, childcare expenses, and unemployment.[12] There is a clear connection between women’s issues and the CTC because women continually face disproportionate economic impacts from the burdens of childcare.[13] [LG1] For example, women are more likely than men to take off paid work to care for family members, costing an average of $142,693 over a lifetime; almost 80% of single parents are women; and during the pandemic, women were more likely than men to leave their job to provide childcare.[14] The National Women’s Law Center found that when the CTC was raised in 2021, “1.5 million women were lifted out of poverty – including 1 million Black women, Latinas, and Asian women.”[15]  Similarly, the 2021 CTC expansion reached over sixty million children, as child poverty was cut by 30%.[16] Mothers were able to balance work and childcare with these benefits and fewer parents reported being unemployed.

Although the CTC offers many benefits for women and children, families in the lowest income quintile typically did not earn enough to qualify for the tax credits. Under three-quarters of families in this quintile were eligible for the CTC.[17] As compared to other quintiles, the credit was the smallest for low-income families as they were less likely to qualify for the refundable credit compared to middle-class earners.[18] The lack of full refundability perpetuates the cycle of childhood poverty and marginalization, as the children “left behind” are the ones who need the credit the most.[19] The children that are most affected by the lack of refundability are children under the age of six, Black and Hispanic Children, and children living in single-parent households.[20] These statistics raise the important question of how the CTC and polices could break the cycle of poverty and marginalization, especially in light of the upcoming election.

What Next?

With the Tax Cuts and Jobs Act (TCJA) expiring in 2025, the expansion of the Child Tax Credit (CTC) was a key issue for voters in the recent presidential election. Under Vice President Kamala Harris’ future tax policy, she planned to expand the current CTC by making the American Rescue Plan Act permanent.[21] This would have increased the CTC for newborns to $6,000 for their first year, $3,600 for children ages one to five, and $3,000 for children five and older.[22] Harris had not specified an income threshold.[23] Similarly, President-elect Donald Trump plans to expand the CTC, but the measures in his policy differ from Vice President Harris. While Trump has not spoken directly about the expansion, his running mate, J.D. Vance, said he would like to see the CTC increased to $5,000 per child and the credit expanded to all families, regardless of income.[24] 

Harris and Trump both strived to expand the CTC, but their approaches in policy differed in terms of the distribution amount and the process of obtaining funding for the credit. While the differences in their policies may initially seem small, the impact of the expanded CTC may bring vast social welfare benefits for impoverished families and children throughout the country.

[1] Arianna Fano, Andrew Lautz, The 2025 Tax Debate: The Big Picture for Individual Taxes in TCJA, Bipartisan Policy Center (Jul. 12, 2024), https://bipartisanpolicy.org/explainer/the-2025-tax-debate-the-big-picture-for-individual-taxes-in-tcja/.

[2] David Floyd, What Is the Tax Cuts and Jobs Act (TCJA)?, Investopedia (Oct. 24, 2024), https://www.investopedia.com/taxes/trumps-tax-reform-plan-explained/.

[3] Jessica Goodman, Andrew Lautz & Anna Renner, The 2025 Tax Debate: Where Republicans and Democrats May Agree, Bipartisan Policy Center (Aug. 15, 2024), https://bipartisanpolicy.org/explainer/the-2025-tax-debate-where-republicans-and-democrats-may-agree/.

[4] The First Five Things To Know About: A New Poll Showing Voter Support For Child Care Funding, First Five Years Fund (Jul. 16, 2023), https://www.ffyf.org/resources/2023/07/july23poll/.

[5] The Child Tax Credit, The White House, https://www.whitehouse.gov/child-tax-credit/.

[6] Child Tax Credit Overview, National Conference of State Legislatures (May 3, 2024), https://www.ncsl.org/human-services/child-tax-credit-overview#:~:text=Originally%2C%20the%20tax%20credit%20was,the%20earned%20income%20tax%20credit.

[7] Id.

[8] Id.

[9] Id.

[10] Sabrina Parys, Child Tax Credit 2024-2025: Requirements, Who Qualifies, Nerdwallet (Oct. 22, 2024), https://www.nerdwallet.com/article/taxes/qualify-child-child-care-tax-credit.

[11] 2024-2025 Child Tax Credit: Top 7 Requirements, Turbotax (Oct. 24, 2024), https://turbotax.intuit.com/tax-tips/family/7-requirements-for-the-child-tax-credit/L3wpfbpwQ.

[12] Amy K. Matsui & Kathryn Menefee, Restoring the Child Tax Credit Expansion Will Help Women and Children, National Women’s Law Center, (Sept. 25, 2023), https://nwlc.org/restoring-the-child-tax-credit-expansion-will-help-women-and-children/#:~:text=In%202021%2C%20the%20expanded%20CTC%20lifted%201.5%20million%20women%20out,are%20headed%20by%20single%20mothers).

[13] Id.

[14] Id.

[15] Id.

[16] Cory Turner, The expanded child tax credit briefly slashed child poverty. Here’s what else it did, NPR (Jan. 27, 2022), https://www.npr.org/2022/01/27/1075299510/the-expanded-child-tax-credit-briefly-slashed-child-poverty-heres-what-else-it-d.

[17] What is the child tax credit?, Tax Policy Center (Jan. 2024), https://taxpolicycenter.org/briefing-book/what-child-tax-credit.

[18] Id.

[19] Bruce Lesley, The Child Tax Credit and Its Potential Impact on the Lives of Children and Future of the Nation, First Focus on Children (Feb. 15, 2024), https://firstfocus.org/resource/the-child-tax-credit-and-its-potential-impact-on-the-lives-of-children-and-future-of-the-nation/#:~:text=Due%20to%20the%20expiration%20of,22%5D.

[20] Id.

[21] The Child Tax Credit: A Key Issue for Trump and Harris, Cherry Bekaert (Oct. 17, 2024),  https://www.cbh.com/guide/articles/child-tax-credit-expansion-trump-vs-harris-proposals/.

[22] Id. 

[23] Id.

[24] Id.