Rep. Jason Smith, R-Mo., speaks during a House Oversight and Accountability Committee impeachment inquiry hearing into U.S. President Joe Biden on Sept. 28, 2023.
Jonathan Ernst | Reuters
Key Tax Provisions in Limbo as Congress Debates
As Congress debates President-elect Donald Trump’s agenda, several key tax provisions, including the child tax credit claimed by millions of families, are in limbo.
Enacted by Trump, the Tax Cuts and Jobs Act of 2017 temporarily increased the maximum child tax credit to $2,000 from $1,000 per child under 17 and widened eligibility with higher-income phaseouts. Without action from Congress, this benefit will revert after 2025, potentially impacting returns filed in 2027.
“The last thing families need is to see Washington slashing their child tax credit in half,” said House Ways and Means Committee Chairman Jason Smith, R-Mo., during a committee hearing.
Child Tax Credit Disparities
In addition to a higher maximum benefit, the TCJA capped the refundable portion of the child tax credit, reducing the benefit for lower-income families without taxes due.
An estimated 17 million children with lower-income parents won’t receive the full value of the child tax credit in 2025, according to a Tax Policy Center analysis.
Support for Extending Child Tax Credit
Despite concerns about the federal budget deficit, there is bipartisan support to extend the expiring child tax credit. House lawmakers passed a tax package in January 2024, including a child tax credit expansion, although Senate Republicans blocked similar legislation due to policy concerns.
With competing priorities and a growing deficit, it remains uncertain if lawmakers will extend the boosted child tax credit and how the future design may change.
The three-month fiscal year 2025 deficit ballooned to $710.9 billion in December, nearly 40% higher than the previous year, according to the U.S. Department of the Treasury.