Senate Republicans' spending bill boosts child tax credit. Who stands to benefit

CNBC

7 hours ago

Senate Republicans on Tuesday passed President Donald Trump's spending package, which includes a bigger child tax credit — but some families won't see a benefit, policy experts say.
Under current law, the maximum child tax credit is $2,000, which will revert to $1,000 after 2025 without changes from Congress. Wider income eligibility limits will also sunset without an extension.
If enacted, the Senate bill would permanently raise the top credit to $2,200 starting in 2025. The provision would also index this figure for inflation after 2025.
By contrast, the House-approved One Big Beautiful Bill Act would increase the highest child tax credit to $2,500 from 2025 through 2028. After that, the credit's max value would fall to $2,000 and be indexed for inflation.
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With differences between the Senate and House provisions, it's unclear how the measure could change. The House still must approve the Senate's legislation before it arrives at Trump's desk for signature.
For 2025, the child tax credit is worth up to $2,000 per qualifying child under age 17 with a valid Social Security number.
After the first $2,500 of earnings, the child tax credit value is 15% of adjusted gross income, or AGI, until the tax break reaches that peak of $2,000 per child.
The tax break starts to phase out once AGI exceeds $400,000 for married couples filing together or $200,000 for all other taxpayers.
However, "if you have very low income, you can't access the full $2,000 credit," Elaine Maag, senior fellow in the Urban-Brookings Tax Policy Center, previously told CNBC.
The reason: The child tax credit is only partially "refundable," which provides a benefit after your balance reaches $0. This feature helps the lowest earners who typically don't owe taxes.
The refundable portion, known as the additional child tax credit, is worth up to $1,700 for 2025.
If the Senate bill is enacted, the bigger child tax credit would primarily go to middle- and upper-income families, according to Kris Cox, director of federal tax policy with the Center on Budget and Policy Priorities' federal fiscal policy division.
Currently, 17 million children do not receive the full $2,000 credit because their families don't earn enough and owe enough taxes, the organization finds.
"Both bills leave behind children in families with lower incomes," Cox told CNBC.
In 2024, the House passed a bipartisan bill to address this issue by boosting the refundable portion of the credit, but the legislation later failed in the Senate.
The proposed higher child tax credit comes as the U.S. fertility rate hovers near historic lows, which has troubled lawmakers, including the Trump administration.Some research suggests financial incentives, like a bigger child tax credit, could boost U.S. fertility. But other experts say it won't resolve the issue long-term.