As policymakers consider changes to the child tax credit (CTC) in 2025, this brief highlights new findings from Wiersma Strauss and colleagues (2025) examining the credit’s effect on parental employment and estimating the employment impacts of various modifications to the credit.

Our estimates suggest:

• phasing in the refundable portion of the credit starting with the first dollar of earnings on a per-child basis up to $2,000 per child would increase employment among unmarried mothers by 1.3 percentage points;
• increasing the credit amount and making it fully refundable for parents of children under two years old would slightly reduce employment by about 0.1 percentage points, with the largest declines in employment among unmarried mothers (0.2 percentage points);
• increasing the maximum nonrefundable credit amount to $5,000 per child would primarily affect middle- and upper-income married mothers, raising their employment by about 0.5 percentage points. If this larger maximum credit also applied to the refundable portion of the credit (currently $1,700 per child) while keeping current phase-in rules, we estimate employment for unmarried mothers would increase by 1 percentage point.

This new research demonstrates that it is possible for policymakers to expand access to the CTC, including for low-income workers and parents of very young children, while having little effect on reducing parental employment and, in some cases, increasing parental employment.