Experts predict the child tax credit discussion may become “fascinating” as the Senate considers Trump’s large-scale legislation.
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As the Senate debates President Donald Trump’s multi-trillion-dollar tax and spending package, changes to the child tax credit are anticipated, according to policy experts.
If enacted as drafted, the House-approved bill would make permanent the maximum $2,000 credit established by Trump’s 2017 tax cuts, which would revert to $1,000 after 2025 without Congressional intervention. The highest credit could increase to $2,500 from 2025 to 2028, after which it would revert to $2,000 and be indexed for inflation.
However, the Senate may have alternative plans, and negotiations are expected to be “really interesting to watch,” said Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.
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The proposed increase in the child tax credit comes as the U.S. fertility rate remains near historic lows, a concern for lawmakers, including the Trump administration. Some research indicates that larger financial incentives, such as a higher child tax credit, could encourage U.S. fertility, while others argue that it won’t address the issue long-term.
As the Senate prepares to discuss Trump’s significant bill, here’s how the child tax credit may change.
Republican child tax credit support:
While Democrats have long advocated for an expansion of the child tax credit, there is now a bipartisan effort for changes. Vice President JD Vance, previously a Senator of Ohio, proposed a higher child tax credit during the campaign last August, stating, “I’d love to see a child tax credit that’s $5,000 per child. But, of course, you have to work with Congress to assess its viability.”
Sen. Josh Hawley, R-Mo., also called for a $5,000 child tax credit in January, which would apply the credit to payroll taxes and provide advance payments throughout the year. “There’s some recognition that they need to do a little more,” Gleckman noted.
Credit ‘refundability’ could change:
Often, tax credits do not benefit the lowest earners unless they are “refundable,” allowing filers to claim the credit even without a tax liability. Nonrefundable credits can exclude consumers who lack tax liabilities.
House lawmakers passed a bipartisan child tax credit expansion in January 2024, designed to improve accessibility and retroactively boost the refundable portion. Although this bill did not advance in the Senate, Republicans indicated they would revisit the proposal. However, the child tax credit in the latest House-approved bill is less generous than the provision passed in 2024, according to policy experts. As currently written, the House plan does not provide additional benefits to 17 million children from low-income families who cannot claim the full $2,000 credit, wrote Margot Crandall-Hollick, principal research associate at the Urban-Brookings Tax Policy Center, in May.
