Child Tax Credit

The Child Tax Credit (CTC) is a direct, efficient tax credit for American families.  The credit is granted for each qualifying dependent child. Designed to help taxpayers support and strengthen their families, this credit was created in 1997 with bipartisan support and expanded in 2017 under President Trump, then enhanced again in 2021 under President Biden. 

We believe that American families deserve a long-term solution for the Child Tax Credit that creates a sense of stability for parents and is not routinely subjected to partisan politics. 

The History

There’s a good history to guide us. The Child Tax Credit has been built upon and expanded several times from its original structure. The policy benefits from a bipartisan appeal, having been expanded under both Republican and Democratic majorities over two decades of history supporting American families. 

Under the most recent Child Tax Credit expansion, eligible American families are provided a credit of up to $3,000 per child over the age of six and $3,600 per child under the age of six. The disbursement of this credit became monthly to assist families with routine expenses of parenting, the total dollar amount per child was raised, and the age limit for receiving these payments was raised from 16 to 17 as part of the American Rescue Plan Act in March 2021.

3.7 Million Children

The enhanced monthly Child Tax Credit was fully refundable in 2021, enabling the policy to lift 3.7 million children from poverty, according to Columbia University. Furthermore, these monthly payments helped to cover important family expenses. Common uses for the payments, according to the Census Bureau and a Social Policy Institute study, include groceries, utilities, clothing for children, and emergency savings.

Additionally, an analysis at the Brookings Institute found no increase in unemployment among parents receiving the CTC. Analyses of the tax credit conducted by the Washington University in St. Louis’ Social Policy Institute found that parents receiving CTC were far more likely to work more hours or the same amount, instead of less. Among the 6 percent of parents who reported working less due to the credit, more than half were parents of infants or toddlers.

The Child Tax Credit has since reverted back to its expanded form under the Tax Cuts and Jobs Act of 2017. From this baseline, there are many ways to implement and design future iterations of an extended and/or enhanced Child Tax Credit. However, the current CTC is set to expire in 2025 without Congressional intervention.