Three tax provisions—the child tax credit, the earned income tax credit (EITC), and the personal exemption for dependents—have significant effects on the tax burdens faced by households with children. Both the House and Senate versions of the reconciliation bill, also referred to as the One Big Beautiful Bill Act (OBBBA), increase the child tax credit and retain the elimination of the dependent exemption. The accompanying data illustrate trends in the tax value of these three provisions under current law and assuming the enactment of either the House or Senate bills.

When compared to past levels, including in 2017, future declines in the combined value of the child tax credit, EITC, and dependent exemption in real dollars and relative to the size of the economy as measured by gross domestic product (GDP) are primarily due to the way these provisions are indexed to change over time. Average household income rises with both inflation and real growth, whereas these three provisions have only sometimes been indexed for inflation and never for real growth.