Long a Stranger to the Spotlight, Child Tax Credit Earns Embrace of Both Parties

Correction appended August 26

The Child Tax Credit isn’t a subject you’d expect to receive much attention in the middle of a heated presidential campaign.

Somewhat technocratic in nature, invisible to a large share of the electorate, the benefit was established in 1997 to provide relief to parents while their kids were young. Its reach is impressive, granting up to $2,000 per child to roughly 40 million American households, but it’s hardly the kind of policy that grows in prominence in the months before Election Day .

If that’s true, however, no one told Washington.

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Both Kamala Harris and Donald Trump have declared their intentions to expand the credit if elected. Republican vice presidential nominee J.D. Vance has openly mused about lifting its value up to $5,000 , a commitment that would cost trillions over the next decade. And the U.S. House of Representatives approved a much more modest extension on a bipartisan basis in January, only to see its progress halted by Republicans in the Senate.

At the heart of the issue are debates reaching back to the credit’s origins about who should be its primary beneficiaries: middle-class households or those with little or no income.

Progressives have long sought to use the CTC as a weapon against inequality; their efforts culminated in 2021 with a temporary expansion that massively cut child poverty for a year, then expired to the disappointment of activists. But conservatives, both in the Clinton era and today , have feared that increasing the credit’s size and decoupling it from work requirements could transform it into a cash welfare program of the kind they helped to sideline nearly 30 years ago.

Both parties’ long-standing positions are headed toward a harsh deadline, however. Next year, a host of provisions from Trump’s signature 2017 tax cut will expire, among them a measure that boosted the Child Tax Credit from $1,000 to its present $2,000. Already weakened by inflation, the benefit would be cut in half if nothing is done. With 2025 coming into ever-sharper focus, Republicans and Democrats have both put forward ideas to stabilize the CTC — the only question is whether either party will hold enough power to enact its vision.

Colorado Sen. Michael Bennet, a Democrat who has spent years advocating for a more powerful CTC, said in a statement to The 74 that he was glad to hear of Harris’s recent proposal to restore the parameters of the 2021 expansion .

“For six shining months in 2021, we finally treated children in poverty like they were our children, not someone else’s,” Bennett said. “I think that should be our model going into 2025.”

But Robert Greenstein, president emeritus of the left-leaning Center on Budget and Policy Priorities and a veteran of past poverty debates, said he believed that the most probable outcome of this year’s elections would be a divided federal government, likely necessitating a bipartisan consensus on the credit’s future.

The Senate’s failure this month to act on legislation already passed in the House suggested that any move to alter or expand it would have to be tied to other tax cuts favored by the GOP, he added.

“They didn’t want to have this negotiated on its own,” Greenstein said. “They want it as part of the negotiations for the extension of the 2017 tax bill, which will occur next year.”

A debate on entitlement

From relatively small beginnings, the Child Tax Credit has grown significantly more generous over time. It was worth just $400 per child in 1997, increasing to $500 the next year. That number leapt to $1,000 per child in the 2001 Bush tax cuts, then doubled again to $2,000 in 2017’s Trump-led law.

The CTC has simultaneously become accessible to many more people. Initially conceived as a “non-refundable” credit (i.e., one that could only be claimed by people who paid a certain amount of federal taxes) it later became “partially refundable,” such that lower-earning families could collect a portion of it. After 2021, they could receive a credit equal to 15 percent of their earnings over $10,000, a threshold that was lowered successively to $3,000, and finally to $2,500 in 2017.

Although many of those changes occurred under Republican Presidents George W. Bush and Trump, conservatives remained leery of backing their way into a new, welfare-like “child allowance.”

“For most of the ’90s and 2000s, you had Democrats who preferred a fully refundable tax credit where what you got didn’t depend on having taxable income,” said Scott Winship, a researcher on family policy for the conservative American Enterprise Institute. “Republicans were more focused on giving middle-class families a tax cut and having an earnings requirement.”

But after their victory in the 2020 elections, Democrats acted almost immediately to transform the CTC into a kind of child allowance ,supercharging its annual value to $3,600 for children under six and $3,000 for those aged six to 17 and allowing the poorest households to receive its full amount.

The expansion only ran through the end of the year, but many within the Democratic Party have loudly advocated for restoring it, pointing to a national child poverty rate that plummeted from 9.7 percent in 2020 to 5.2 percent in 2021. While only a few years have passed since the policy was enacted, some early evidence indicates that the jumbo-sized CTC allowed poor families to spend more in ways that are likely helpful to child development. Its effects were especially large in high-poverty states in the Midwest and Sun Belt, a report from the Brookings Institution found.

Yet some of the big-ticket bids to transform the program into a much larger entitlement strike some observers as unworkable. In a recent interview, Vance said he would favor a $5,000 credit per child, which the nonprofit Tax Foundation estimated could cost as much as $300 billion annually. Greenstein dismissed the notion as “wildly expensive.” — particularly given that the Ohio senator specified that all American families, including both the poor and the ultra-rich, should be considered eligible recipients.

“Somehow I find it hard to imagine that we’ll have a tax bill next year with a net cost of $3 or $4 trillion over 10 years,” he said. “Somewhere along the line, fiscal concerns will limit the magnitude.”

A ‘no-brainer’?

Any further developments on the Child Tax Credit will hinge on the outcome of the upcoming elections.

Trump appears to support his running mate’s proposal, noting that it was during his administration that the CTC grew to its current size. Meanwhile, in her first major address on policy, Harris counter-offered a sizable increase of her own, with parents of newborns receiving $6,000.

Notably, a bipartisan bill to expand the credit already made it through the House of Representatives this year, gathering 357 votes in favor . Co-sponsored by the Republican chairman of the House Ways and Means Committee, the legislation would significantly lower the income threshold to receive the CTC’s full value, potentially lifting 400,000 children above the poverty line.

Despite its towering margin in the House, the proposal was criticized as being far less effective than the 2021 expansion by Democratic Rep. Rose DeLauro, a longtime advocate of making the credit more generous. Winship and his colleagues at AEI, on the other hand, argued that the expansion could disincentivize low-income parents from pursuing full-time work , or even getting married .

Winship said he was “a little nervous” that weakening employment requirements could hurt families’ chances of escaping poverty — in the same way, he argued, as the less conditional cash welfare programs of the 1970s and ‘80s did.

“Those programs have work disincentives for the parents, but they also have savings disincentives, marriage disincentives, disincentives for parents against investing in their skills,” he said. “Those are the sorts of behaviors that promote upward mobility, and we worry that you’re not actually doing kids a favor in the long run by giving their parents cash without conditions.”

But Keri Rodrigues, the head of the National Parents Union , said the Republicans failed American children when they blocked the deal from passage in the Senate. Rodrigues traveled to Washington in early August with members of her organization, which advocates for families and schools, to gather support for the compromise legislation. They saw some success — three Republicans voted in favor, including conservative Missouri Sen. Josh Hawley — but returned home discouraged in the face of a GOP-led filibuster.

Rodrigues called the CTC expansion a “no-brainer,” adding that families already squeezed by inflation couldn’t afford to see the benefit fade as well.

“It transcends geography, demographics, political party,” she said. “This is something everyone agrees needs to happen.”

Correction: An earlier version of this story misidentified the affiliation of Keri Rodrigues.