With each party trying to one-up the other on its family friendliness, the popular child tax credit has become a major point of rivalry in this year’s presidential election.
Vice President Kamala Harris, the Democratic presidential nominee, has made boosting the child tax credit a central piece of her recently released four-part platform to lower costs for American families, which also included measures to make housing, groceries and prescription drugs more affordable. She wants to restore the 2021 American Rescue Plan Act’s enhanced credit of up to $3,600 per child, which was only in effect for one year, as well as create a $6,000 credit for newborns.
Meanwhile, Ohio Sen. JD Vance, the GOP vice presidential pick who has repeatedly claimed Democrats are anti-family, told CBS News earlier this month that he’d like to see the child tax credit beefed up to $5,000 per child – though he’d have to see how “viable” that would be in Congress. Former President Donald Trump, who is at the top of the ticket and whose daughter Ivanka successfully pushed to expand the credit during his first term, indicated in a separate CBS News interview this month that he supports a generous child tax credit.
“Campaigns are looking for policies that are popular and populist,” said Josh McCabe, director of social policy at the Niskanen Center, a right-leaning think tank, noting that increasing the child tax credit’s amount is the easiest sell to voters. Also, the credit isn’t limited to a particular need, as it is with the child care credit, for instance. “With the child tax credit, families see it as being able to spend it on whatever they want.”
Vance and Democrats have also traded barbs over the credit, with the vice presidential nominee falsely claiming that Harris wants to end the benefit, and Democrats attacking him for missing a recent vote that would have temporarily broadened the credit.
Whoever wins the White House will have to deal with the child tax credit next year since it is scheduled to revert back to a maximum of $1,000 in 2026, down from the current ceiling of $2,000 put in place by the Republicans’ Tax Cuts and Jobs Act of 2017. The credit is one of many individual income tax provisions in the law that lapse at the end of next year.
Here’s what you need to know about the child tax credit:
The child tax credit, which about 46 million families claimed in 2022, was approved by a Republican-led Congress and signed into law by then-President Bill Clinton, a Democrat, in 1997. It was a relatively modest tax credit for middle-income families, designed to help ease the financial burden of having kids, said Margot Crandall-Hollick, a principal research associate at the nonpartisan Tax Policy Center.
“The child tax credit is appealing to families, and because of that, it’s appealing to politicians,” she said, noting that almost 90% of families with kids got the credit in 2022.
Originally, the credit of up to $500 per child was nonrefundable, meaning that parents had to earn enough to pay federal income taxes to receive it. But it also began to phase out for single taxpayers with incomes greater than $75,000 and married couples earning more than $110,000.
Since then, the credit has been expanded in a number of ways, including getting beefed up to as much as $2,000. Also, it is now partially refundable so lower-income families can receive at least a portion of the credit as long as they earn at least $2,500, even if they don’t owe federal income tax. And more higher-income households are eligible since the credit now starts phasing out for single parents with incomes of $200,000 and married couples earning double that amount.
But all of this changes starting in 2026, when the $1,000 maximum credit and lower phase-out thresholds return, if Congress doesn’t act. Plus, low-income families would have to earn at least $3,000 to qualify.
What the candidates want to do
By restoring the American Rescue Plan enhancement, Harris would greatly increase the size of the child tax credit and open it up to millions more low-income families by making it fully refundable.
The Covid-19 pandemic relief law boosted payments for lower- and middle-income families for 2021 to as much as $3,600 for each child up to age 6 and to a maximum of $3,000 for each one ages 6 through 17. Plus, for the first time, half the credit was paid in monthly installments from July through December that year to help families cover their expenses, while parents could claim the other half when they filed their 2021 taxes.
The enhancement slashed the child poverty rate nearly in half in 2021, lifting 2.1 million children out of poverty, according to the US Census Bureau – though the rate returned roughly to its pre-pandemic level the following year.
Harris would also add a $6,000 credit for children in their first year of life to help cover expenses such as car seats and diapers. She has not specified the income threshold for this credit.
“There’s one more way I will help families deal with rising costs, and that’s by letting you keep more of your hard-earned money,” Harris said in a recent speech unveiling her economic platform, which her campaign noted would provide tax relief to more than 100 million Americans.
Vance, on the other hand, has not released any details about increasing the credit but said on CBS News’ “Face the Nation with Margaret Brennan” that the $5,000 credit should be universally available.
“I don’t think that you want this massive cutoff for lower-income families, which you have right now,” he said. “You don’t want a different policy for higher-income families. You just want to have a pro-family child tax credit.”
When Trump was asked in a separate CBS News interview whether he supports increasing the credit to $5,000, as his running mate floated, the former president said that he is in favor of the “doing the maximum,” but pointed out that it must be negotiated in Congress.
The cost of expanding the credit has been a sticking point among lawmakers at a time when the nation’s debt continues to climb. Harris’ proposal could add about $1.2 trillion to the federal deficits over the next decade, while Vance’s idea could cost between $2 trillion and $3 trillion over that period, according to Marc Goldwein, senior policy director for the Committee for a Responsible Federal Budget, who noted that the estimates could change if the candidates release more details about their proposals.
President Joe Biden and congressional Democrats have tried unsuccessfully to extend the 2021 expansion or pass a smaller enhancement. Senate Republicans earlier this month tanked a bill that would have provided a larger credit to low-income families, along with restoring some business tax benefits. The legislation received bipartisan approval in the House earlier this year.
