The Child Tax Credit (CTC), a critical financial resource for millions of American families, could be drastically altered under the Trump administration. As key legislative provisions approach their expiration, families who have come to rely on this benefit may see significant changes that could strain their budgets.
A Look Back: How the Child Tax Credit Evolved
The CTC was originally established to help families offset the cost of raising children. Before 2017, the credit offered $1,000 per qualifying child. But the Tax Cuts and Jobs Act (TCJA), signed into law by President Donald Trump during his first term, doubled the credit to $2,000 per child and increased the refundable portion to $1,400. This change provided much-needed relief to middle-income families and expanded eligibility for more households.
These enhancements are set to expire at the end of 2025 unless Congress takes action to extend them. If they are not renewed, the credit would revert to $1,000 per child, which could place a financial strain on millions of families.
Temporary Pandemic Expansions Have Already Ended
In 2021, the American Rescue Plan Act further expanded the CTC to help families cope with the financial impact of the COVID-19 pandemic. For one year, the credit increased to $3,600 per child under age six and $3,000 per child aged six to seventeen. Families also received monthly advance payments, giving them financial assistance throughout the year.
However, this temporary expansion expired at the end of 2021, and the credit returned to the $2,000 level under the TCJA. Without further action, the amount could drop even lower after 2025.
What Could Happen Next?
If Congress does not intervene, the expiration of the TCJA’s provisions could see the CTC shrink back to its pre-2017 levels. This change would disproportionately affect low- and middle-income families who depend on the credit to cover costs like childcare, school supplies, and healthcare.
On the political front, President Donald Trump has indicated that he would consider maintaining or even expanding the credit further. At the same time, policymakers like Vice President Kamala Harris have proposed more ambitious increases, including a plan to raise the credit to $6,000 for newborns and $3,600 for children under six. However, no consensus has been reached, leaving the future of the credit uncertain.
How Families Could Be Affected
The potential rollback of the CTC could result in families receiving less financial relief each year. For example, a family with two young children currently receiving $4,000 in credits would see that drop to $2,000 if the provisions expire. For many households, this could mean increased difficulty in covering basic expenses.
What’s Next?
With the expiration date approaching, Congress will need to debate whether to extend the current provisions, revert to the older structure, or introduce new reforms. Families should stay informed and prepare for possible changes that could affect their budgets in the coming years.
