By Ashley Burnside

Families throughout the nation are facing a worsening affordability crisis. Tax credits, like the Child Tax Credit (CTC), can provide a temporary cash influx during tax season to help families pay off high-interest debt, afford bigger expenses like a car repair, or bolster their savings for an emergency. But because the CTC has an earnings requirement, it won’t reach 19 million children because their families don’t earn enough. It will also exclude 2.6 million children with parents who don’t have Social Security numbers. The CTC lifted approximately 2.4 million children above the poverty line in 2024, reducing child poverty by about 20 percent. In comparison, an expanded CTC would lower the child poverty rate by nearly half. Lawmakers should expand the CTC to reduce child poverty and to invest in families.

Raising a child has always been expensive, but parents across the country are facing steeper costs each month, while wages are not keeping up. Rent and housing costs are increasing, as are the costs for groceries, child care, utility bills, and more. The war in Iran has also skyrocketed gas prices, which will hit families who rely on driving to commute to work especially hard. The CTC alone will not solve this affordability crisis, but it is one tool that can help parents pay their bills and provide more enrichment opportunities for their children during tax time.

The CTC is a tax credit available to families with children under the age of seventeen who meet income and eligibility criteria. H.R. 1 (also called the One Big Beautiful Bill Act), which became law last summer, increased the maximum CTC from $2,000 to $2,200 per child and indexed the credit to inflation. But the law did not increase the CTC for the families who need it most.

An estimated 19 million children, or thirty percent of all kids, won’t get the full CTC due to their families not earning enough in 2026. This is because families must have a certain amount of earnings to be eligible for the full credit due to the way it is structured. As a result of many systemic factors, including employment and wage discrimination, generational racism, and segregated housing opportunities, the children not receiving the full CTC due to their families not earning enough are likelier to be Black, Latino, or Native American compared to white and Asian children. [Note: This statistic includes Asian communities as an aggregate, and therefore may mask specific outcomes for Asian American, Native Hawaiian, and Pacific Islander subgroups.] About half of Black children won’t get the full CTC in 2026; neither will 42 percent of Latino children or over half of Native American children, compared to about one in five white and Asian children. Meanwhile, a family making up to $400,000 per year will be eligible for the full CTC under current law.

The H.R.1 law also newly made certain immigrant families ineligible for the CTC. Individuals who are not eligible for Social Security numbers can use an Individual Taxpayer Identification Number (ITIN) to file their taxes. Up until the passage of H.R.1 last summer, if the child in the household had a Social Security number, their parents could claim the CTC on their behalf if they have ITINs. Now, at least one parent must have a Social Security number to claim the CTC for the child.

CLASP estimates that 2.6 million children who are U.S. citizens will be newly ineligible for the CTC this year due to this discriminatory policy change. They won’t be the only children left out; because of a policy enacted under the 2017 Trump tax bill, children must have Social Security numbers to be eligible for the CTC. This policy means that about 1 million additional children without Social Security numbers have been excluded from receiving the CTC for the last eight years. These policies will have profound impacts on many immigrant populations and increase the number of people living in poverty.

The small increase to the CTC passed under H.R.1 pales in comparison to the tax breaks that were passed for the very wealthy and for corporations. For example, the law cuts the estate tax, allowing more higher income families to inherit generational wealth without facing the estate tax. It also reduced the top marginal tax rate from 39.6 percent to 37 percent, benefitting those with incomes over $640,000 ($768,000 for married couples). The rich will get richer under this bill, while families will only get a maximum of $200 more per child under the CTC. And this law leaves millions of children out from benefitting from that credit altogether.

Lawmakers should permanently expand the CTC, make it fully available to the thirty percent of children who will be left out of getting it this year, and remove the discriminatory eligibility restrictions for families with ITINs. The American Family Act (H.R 2763/S.1393) is one bill that would make these changes. Lawmakers should also expand the Earned Income Tax Credit to help it reach more young workers and workers without dependent kids. Finally, lawmakers should also reinstate the Direct File tool that helps tax filers claim their taxes for free.

The tax code is an important tool for investing in families and workers. Lawmakers have advanced tax policies that don’t reach people living in poverty and that exclude immigrant families, while allowing the wealth gap to widen by implementing changes allowing the rich to get richer.