The Future of the Child Tax Credit: What the Incoming Trump Administration Has Said

The clock is ticking on the child tax credit, which shows its value will drop significantly if not extended until 2026, but has Donald Trump’s incoming administration given any indication of its plans for it?

Vice President Kamala Harris, the 2024 Democratic presidential nominee, made credit expansion, especially for families with newborns, a key part of her economic platform, but its future now rests in the hands of President-elect Trump’s incoming administration. and potential plans for new tax breaks. Trump and his running mate, Sen. JD Vance, had similar hopes for credit expansion, though those were less specific than Harris’s. A recent New York Times report sheds light on the discrepancy between their views and Harris’s.

Read on to find out what the child tax credit could be in the near future. For more information about taxes, learn how the IRS behaves payment programs are moving forward and What changing tax brackets could mean for you.

What is the child tax credit?

Child tax credit offers tax relief to parents for each child under the age of 17. First introduced in 1997, the credit currently offers $2,000 per child, of which only $1,600 is refundable, meaning you can get that amount even if you don’t owe that much in taxes. The remaining $400 is not refundable, so it can only be used to reduce your tax burden.

in 2021 President Joe Biden’s American Rescue Plan passed and brought significant increases to the child tax credit. Under the law, the credit was expanded to pay $3,600 for a child under 6 and $3,000 for a child between 6 and 17. The loan was also repayable in full and had to be paid in part as a monthly allowance.

Studies show that the temporary credit increase in 2021 had a significant impact on childhood poverty. Columbia University Center on Poverty and Social Policy found that payments reduce monthly rates about 30% of child poverty, and payments reached about 61 million children.

What happened to child tax credit after 2021?

After 2021, Congress did not renew the temporary tax credit and the child tax credit returned to its previous levels and After 2025, it is planned to decrease again to 1000 dollars per child.

Efforts to expand credit since 2021, including, have not yielded any results Senate vote on August 1 It failed 48 to 44, with all but three Republicans voting against it.

What did the Republicans propose for the child tax credit?

Vance He said this in an interview with CBS News on August 11 He said he would try to increase the credit even more if something like that could be worked out with Congress. Trump’s official “Issues” page For the 2024 campaign, he did not mention the child tax credit, only proposing general tax cuts in one section.

“I would like to see a $5,000 child tax credit,” Vance said in an interview. “But you certainly have to work with Congress to see how feasible and feasible that is.”

In 2017, when Trump signed the Tax Cuts and Jobs Act, which expires in 2025, the child tax credit was raised from $1,000 to $2,000. It says in his 2024 campaign. In a statement to CNBC Trump said he would “consider a significant expansion of the child tax credit,” but did not elaborate on his plans. A recent piece The fate of the child tax credit from the New York Times It noted that Trump was eager to boast that he had “doubled” the credit during his administration, but the article explained that this was not the case, as Trump’s policies treated the child tax credit more like a tax cut than anyone could apply for. The tax applies to the poorest 25 percent of families who earn too little to report.

For more on the history of credit, see CNET’s history eligibility coverage for taxpayers and how it can be affected by joint custody arrangements.