As the cost of raising and supporting children continues to rise in the US, there is a growing consensus across parties to find ways to reduce the financial impact on parents through changes to the Child Tax Credit (CTC). The CTC is a benefit that reduces the tax burden on families depending on the number of children they have. The CTC was expanded in 2017 and temporarily again in 2021 in response to the pandemic with significant results: in 2021, child poverty in the US decreased by nearly 50%, with over 2 million children lifted from poverty. By 2026, the last of the recent changes will expire. 

While other programs exist to support low-income families with children, Republicans and Democrats agree that the CTC is an especially efficient way to support parents and guardians. However, partisan differences exist on how to fund or expand the benefits of the CTC. Currently, Democrats tend to favor expanding the Child Tax Credit’s refundability and monthly benefits as additional direct support to families. Republicans want to expand CTC benefits as well, and look to fund those expansions by shrinking the number of federal programs assisting low-income families and children, citing inefficiencies in running multiple programs for low-income families.  

Proposals include:  

• Expanding the Yearly Benefit Per Child—The current credit provides $2,000 for each dependent child. Some proposals have suggested raising this amount. However, for the 2025 tax year, the credit is set to fall to $1,000 per child
• Remove the Income Cap—Families earning above a certain income threshold are currently ineligible for full CTC benefits. Some proposals would raise these income caps to benefit more families
• Expanding Refundability—Originally, low-income families couldn’t receive any benefit beyond a reduction in the taxes they owed. One of the recent expansions gives these families actual payments instead of just eliminating the taxes they owe. However, the amount of these payments beyond a family’s tax liability has already decreased from its recent high. Some proposals would change this, restoring the higher recent cash payment levels
• Making Refunds Available Monthly—Low-income families who can receive the CTC as a refund currently only do so when they file their taxes. Some proposals would make the expanded refund a monthly payment to families
• Offset costs through adjusting other programs—A key challenge in expanding the CTC lies in finding the ways to pay for it, including finding agreement on reductions to other programs