Child tax benefit increase leaves out millions of kids, analysis says

Axios

23-05-2025

The poorest kids in the country miss out on the full benefits of the expanded child tax credit in the " big beautiful bill."
Why it matters: The bill now making its way to the Senate provides more tax breaks to higher earners than those at the bottom.
By the numbers: The Republican bill raises the maximum child tax credit to $2,500 per child from $2,000 for three years.
20 million children would not fully benefit from the increase, according to an analysis from the Center for Budget and Policy Priorities (CBPP), since their parents don't earn enough income to get the maximum amount.
"A majority of those children get nothing from the proposed expansion," says Kris Cox, director of federal tax policy at the CBPP.
17 million children as of now do not receive the full benefit from this tax credit, per the CBPP. None of them will get anything from the expansion.
How it works: Under current law, families need upward of $30,000 a year to receive the full tax credit amount, explains Joe Hughes, senior analyst at the Institute on Taxation and Economic Policy.
Parents who are poor and don't owe income taxes can only claim up to $1,700 per child, known as the "refundability cap." It's a number which adjusts annually for inflation.
The new bill didn't raise the refundability cap. Instead, it only increases the maximum that parents, earning less $400,000 a year, can claim.
A married couple filing jointly would need to earn $48,550 to receive the full tax credit under the new bill, per CBPP estimates. Under current law, a married couple has to earn $36,800.
Zoom out: The new bill widens the gap between what's available to kids in higher income families and those who need help most.
For example: A married couple with two children earning $400,000 a year, the max income allowed to claim the credit, would get an additional $1,000 tax credit.
A single parent with two children, earning $24,000 a year, would get nothing, Cox explains in a recent Bluesky post.
The parents who miss out on the full benefit are those working in low-paying jobs like cashiers, home health aids and housekeepers.
Presumably a few of these parents are tipped employees who could benefit from the no-tax-on-tips provision of the bill. However, just as with this the child tax credit, many earn too small an income to benefit.
The other side: The standard defense here is that low-income Americans don't pay very much in taxes. Their tax burden is low, so they shouldn't get the full credit because they don't need the tax relief.
White House spokesman Kush Desai says wealth inequality decreased after the 2017 tax bill, and the new bill would lock that success in place.
He adds that it builds on that success "by eliminating taxes on tips and overtime in addition to rewarding American manufacturing with full equipment and factory expensing to turbocharge America's economic resurgence."
Between the lines: This big bill faces big hurdles ahead in the Senate — and the bond market — and it's not clear what will eventually make it through.
The intrigue: The legislation also blocks another 4.5 million children from benefiting from the child tax credit because now to claim it, both parents, if they are filing jointly, must have their own Social Security numbers.
Under current law, parents who don't have Social Security numbers can claim the credit if their child has one. So, for instance, a parent who is a non-citizen immigrant and files taxes with an ITIN number can claim it.
Before 2017, any parent filing taxes could claim the credit. But when Congress changed the law in the first Trump tax bill, 1 million citizen children lost out, Cox says.
State of play: The child tax credit provisions are a stark 180 for the House.