Child Tax Credit Changes Made in Trump's Big Beautiful Bill: What to Know
Newsweek AI is in beta. Translations may contain inaccuracies—please refer to the original content.
The Senate has passed its version of the One Big Beautiful Bill Act - with an expanded Child Tax Credit (CTC) for American families making it into the bill.
The Senate approved the bill on July 1 after a marathon vote-a-rama. The bill passed by a narrow 51-50 margin, with Vice President JD Vance casting the tie-breaking vote.
Why It Matters
The CTC is a federal tax benefit aimed at helping families offset the cost of raising children. As of 2024, the credit provides up to $2,000 per qualifying child under the age of 17, with up to $1,600 of that amount refundable. This means eligible families can receive a portion of the credit as a refund even if they owe no federal income tax.
What To Know
The bill boosts the CTC from a currently credit of $2,000 up to $2,200, and would rise every year linked to inflation. However, it does not change the refundable portion of the credit, which is set at $1,600.
How The Boosted CTC Will Impact American Families
Under the current rules, low-income families often don't receive the full credit because the Child Tax Credit is only partially refundable. That means families must earn a minimum amount (currently $2,500 for 2024 taxes) and receive the refundable portion based on how much they earn. Essentially, the less you earn, the less of the credit you get.
While the approved Senate proposal would increase the maximum credit from $2,000 to $2,200 per child, it does not change how much of that credit is refundable or how it's phased in for low-income earners. Because the $200 increase is added only to the non-refundable portion of the credit, it helps only families who already earn enough to owe taxes or qualify for the full amount under the phase-in rules.
Stock image/file photo: A child's hands touching several U.S. Dollar bills.
Stock image/file photo: A child's hands touching several U.S. Dollar bills.
GETTY
This means that families with very low earnings—such as part-time workers, minimum-wage workers, or those with unstable employment—would not benefit at all from the $200 increase because they don't earn enough to qualify for the full credit under current rules.
Meanwhile, middle- and upper-income families, who already qualify for the full $2,000 credit, would automatically receive the extra $200 per child, with no additional requirements.
Researchers from Columbia University's School of Social Work said in an op-ed for the Washington Post that while "raising the value of the child tax credit makes sense," 1 in 3 children would be ineligible for the extra CTC due to their family having low income.
Immigration Status
Under current rules, families of children with Social Security numbers are eligible regardless of the parents' status - but this is set to change if the bill becomes law.
The proposed legislation restricts eligibility to parents or guardians who have valid Social Security numbers only, effectively requiring tax filers to be U.S. citizens or authorized immigrants. As a result, most non-citizen parents raising children in the U.S. would be barred from claiming the credit, even if their children are U.S. citizens.
What People Are Saying
The White House said in a post on X, formerly Twitter: "The One Big Beautiful Bill delivers the largest tax cut in history for middle- and working-class Americans."
The Center for Budget and Policy Priorities, a left leaning think tank, said in analysis of the CTC changes: "The proposed $200-per-child increase in the credit would leave out children whose parents work important jobs for low pay, while giving higher-income families the full amount."
What Happens Next
The bill returns to the House of Representatives for a final vote before it can be sent to President Trump's desk for his signature.
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