Each the Home and Senate variations of the finances reconciliation invoice embody a rise to the kid tax credit score, however the Home’s model offers a bigger payout to households.
The little one tax credit score is {a partially} refundable tax credit score out there to taxpayers with kids or dependents beneath age 17. Dad and mom and guardians incomes $200,000 a 12 months or much less are eligible to say the total $2,000 credit score per little one by tax 12 months 2025. With out new laws, that restrict will revert to $1,000 per qualifying little one after the expiration of the 2017 Tax Cuts and Jobs Act in 2025.
Congress is making an attempt to extend the utmost credit score quantity by its finances reconciliation course of, however the chambers differ on proposed most quantities. The Home proposal would enhance the utmost credit score to $2,500 per little one, whereas the Senate’s model offers as much as $2,200 per qualifying dependent.
Below the Home’s plan, the $2,500 restrict would stay in place till 2028, then drop to an estimated $2,100 and be listed for inflation in subsequent years, in line with the Tax Coverage Middle. The Senate’s plan would additionally modify the utmost credit score quantity for inflation after 2026. Each proposals preserve the utmost refundable portion of the credit score at $1,700.
Whatever the invoice’s remaining most credit score determine, an estimated 17 million kids nonetheless wouldn’t qualify for the total profit, in line with an evaluation by the Middle on Finances and Coverage Priorities.
That’s as a result of the kid tax credit score isn’t absolutely refundable. As of 2025, households who who don’t owe earnings taxes and earn lower than $2,500 can not declare any portion of the kid tax credit score. These incomes greater than $2,500 could qualify for the extra little one tax credit score — the refundable portion of the credit score value as much as $1,700. Households with incomes over $2,500 can obtain as much as $1,700 as a refund if the remainder of the kid tax credit score covers their tax legal responsibility.
Round 2 million kids don’t presently qualify for any of the kid tax credit score as a result of their households earn lower than $2,500, in line with the Tax Coverage Middle. One other 15 million obtain some, however not the total credit score, as a result of their households make greater than $2,500, however not sufficient that their earnings taxes exceed the quantity that allows them to say the total credit score.
New and persevering with restrictions on who can declare the kid tax credit score
Each the Senate and Home proposals for the kid tax credit score would proceed a restriction launched in 2018 that requires kids to have Social Safety numbers to ensure that their households to have the ability to declare the credit score. Round 1 million kids misplaced their eligibility when this rule went into impact in 2018, in line with the Tax Coverage Middle.
The Home proposal would additionally require each dad and mom to have Social Safety numbers to say the profit, whereas the Senate’s proposal would solely require one father or mother to have one.
Presently, married {couples} who file individually can nonetheless declare the kid tax credit score for eligible kids and dependents, however the Home proposal would finish that eligibility whereas the Senate’s plan would preserve it in place.
The variety of kids with SSNs who don’t obtain the utmost little one tax credit score profit would develop from 17 million to over 26 million beneath the Home’s proposal, in line with Tax Coverage Middle estimates.
The proposal is presently up within the air with conflicting stories on whether or not Senate Republicans have the assist wanted to cross the invoice as is. President Donald Trump is pushing to see the invoice despatched to his desk by July 4, which Senate Majority Chief John Thune (R-S.D.) has stated will occur.
