The House Ways & Means Committee released legislative text May 9^th (updated May 12^th) that would extend and in some cases modify expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA), including those related to the Child Tax Credit (CTC). The bill makes the TCJA changes permanent and temporarily increases the maximum credit, making the credit larger for many moderate and higher income families.  

But because the bill makes no changes to how the credit phases in with earnings for low-income families, it provides no additional benefit to the 17 million children in low-income families currently left out of the full CTC. If  policymakers want to provide additional support to these children, they have several options that cost less than those currently proposed and better focus benefits on families with modest incomes, many of whom are struggling to pay for their family’s basic needs. 

The May 12^th bill text would change the child tax credit in the following ways. 

• Extend the TCJA’s CTC changes permanently and, beginning in 2029, permanently index the maximum $2,000 per child amount to inflation since 2024
• Increase the maximum CTC to $2,500 for 2025 to 2028 with no adjustment for inflation during this period
• Limit the credit to only taxpayers with Social Security Numbers (SSNs). Among married couples, both spouses would need to have SSNs. The bill would not allow married taxpayers filing separately to claim the credit, with some exceptions. (This provision may prevent mixed SSN-status families from filing separately to claim the benefit.) Some estimates suggest that as many as 4.5 million childrenwho are citizens or legal permanent residents— “green card holders”—would lose the credit because of the new parental SSN requirement.)

Combined these changes would cost $797 billion between FY2025 and FY2034, according to the Joint Committee on Taxation (JCT). An earlier score from JCT for the May 9^th legislation found that permanent extension of the TCJA changes would be the most costly provision, with the temporary increase in the maximum credit costing about $90 billion, and the SSN limit raising about $40 billion over the FY2025-FY2034 budget window.

Increasing the maximum credit from $2,000 per child to $2,500 per child effectively adjusts the credit for inflation since the TCJA was enacted (it has not previously been indexed to inflation). 

While this would help many families afford the rising costs of raising children, because the rules surrounding how the credit phases in are unchanged, the lowest-income children would receive no additional benefit under this bill because their parents do not earn enough.

In previous analyses, TPC has estimated that increasing the maximum credit from $2,000 to $2,500 per child would benefit a very small share of low-income families with children who would see only a modest increase in their credit from this policy change. Plus, this increase would be temporary: It would expire in 2028, putting pressure on future policymakers to extend it or make it permanent.

More broadly, the May 12^th bill delivers few benefits for low-income families. For the lowest-income families, past TPC modeling has shown that outside of the child tax credit and the standard deduction, extending other TCJA provisions provides them with little to no benefit.

The May 12^th text does propose a modest and temporary increase in the standard deduction (a $1,000 increase for singles, $1,500 increase for head of household filers, and $2,000 increase for married joint filers). (The May 12^th text also provides an additional year of inflation adjustment to the standard deduction beginning in 2026.) However, a single parent earning $20,000 will gain nothing from this change to the standard deduction, while a married couple making $50,000 will see a gain in 2025 of $200 (65 cents a day or about $4 in a weekly pay check). 

And some low-income taxpayers will find they are no better off from the larger standard deduction because their CTC will be reduced by the same amount as the benefit they receive from this change. For example, a single parent with two kids making $25,000 in 2025 and with a relatively simple tax situation will see their income taxes fall by $150 from the larger standard deduction. But their CTC will fall by the same amount (from $3,625 to $3,475)— so their net tax liability will be unchanged by the bill. 

Prior TPC analysis has shown there are better ways to help working families than increasing the standard deduction.  

The House Ways & Means Committee will likely modify this bill in committee on May 13 and both the House and Senate may make more changes in the days ahead. They could use those opportunities to expand the phase-in of the CTC—as Chairman Jason Smith (R-MO) proposed and supported in the last Congress—and which TPC found would deliver benefits mostly to families with low incomes at relatively modest cost.