By Ashley Burnside

On July 4, President Trump signed his reconciliation law that will make changes to the Child Tax Credit (CTC). The reconciliation law provides tax breaks for the wealthiest people by slashing Medicaid and food assistance funding, and will make changes to how states earn revenue.  

The CTC is a tax credit available to eligible families with children. In 2017, lawmakers temporarily doubled the maximum credit; restricted children without Social Security numbers from being eligible; and made the credit available to families with higher incomes, among other changes. In 2021, lawmakers temporarily expanded the CTC, which helped to decrease child poverty by nearly half. These changes expired after one year. Now, President Trump’s new reconciliation bill will change how big the CTC will be and will cut some families off from accessing it. 

Here are ten things you should know about the CTC:  

1. Most families receive the CTC.

Families who file their taxes, have an eligible child, and have incomes within the allowable limits are generally eligible to claim the CTC each year. The program is far-reaching, doesn’t require additional paperwork beyond filing taxes, and lifts millions of people out of poverty each year.

2. The maximum CTC available to families will be $2,200 per child beginning in tax year 2025.

Under prior law, the maximum CTC was $2,000 per child. Beginning in 2026, the maximum credit amount will be adjusted annually for inflation.

3. The CTC helps families afford essentials and invest in their kids.

The CTC allows parents to afford investments for their family, like summer camp, new toys, or a musical instrument. CLASP survey research concluded that in 2021 parents spent their expanded CTC monthly payments on both essentials (groceries, bills, and rent/mortgage payments) and enrichment activities for their children

4. The income limits for the CTC are the same, and families with the lowest incomes will continue to be left out.

Married couples making up to $400,000 per year are eligible for the maximum CTC. But because of the way the credit is structured, families with lower earnings are not eligible for the full credit. The credit phases in at 15 cents per dollar earned above $2,500 per year, and is only partially refundable. A married couple with two children needs to make at least $41,500 per year to get the full CTC, for example. An estimated 19 million children are in families who will continue to not get the full credit because their parents don’t earn enough.

5. Black and Latino children are disproportionately left out from getting the maximum CTC due to the way the credit is structured.

An estimated 39 percent of Black children and 36 percent of Latino children didn’t get the full credit in 2023 because their parents did not earn enough. This is due to the structural and historical racism within our laws and labor market that have left communities of color with deep inequities, resulting in workers of color receiving lower wages and fewer opportunities for economic prosperity.

6. Families are eligible for the CTC if their children are under age 17 at the end of the tax year.

The 2021 law temporarily extended the age of eligibility for the credit to include seventeen-year-olds, but this provision expired after one year.

7. Children must have a Social Security number (SSN) to be eligible for the CTC.

The reconciliation bill has permanently excluded children from the CTC who don’t have an SSN. This will make an estimated 1 million children ineligible for the credit, a misguided exclusion that will hurt children’s outcomes and force children and families further into poverty.

8. At least one parent must have an SSN to be eligible for the CTC.

Under prior law, parents could claim the CTC for their child if they have an Individual Taxpayer Identification Number (ITIN), but the reconciliation law changed this policy. Now, at least one parent must have an SSN to claim the credit. (A married couple where one spouse has an SSN and one spouse has an ITIN would be eligible.) This will exclude an estimated 2.6 million U.S. citizen children from getting the CTC because their parents don’t have SSNs.

9. The CTC is not available monthly to families.

Under the American Rescue Plan Act of 2021, the CTC was distributed monthly to families from July through December 2021. Since that law has expired, families can now only get the credit annually when they file their tax return.

10. Lawmakers should permanently expand the CTC.

Permanently making the credit fully available to families with lower incomes; permanently increasing the size of the credit to at least the levels provided in 2021 (up to $3,600 for children ages zero through five); permanently making the credit available monthly; and permanently extending credit eligibility to seventeen-year-olds would deliver an income boost from the CTC to more than 60 million children and help families afford essentials. 

The changes to the CTC passed under President Trump’s reconciliation law will cut off some immigrant families from accessing the CTC and will continue to leave families with the lowest incomes out of the full credit, disproportionately excluding Black and Latino families. The CTC doesn’t reach the families who would benefit the most from receiving it. Lawmakers should fix this backwards structure by making the credit fully available to families with low earnings and by ending the ITIN restrictions.