Tax Credit Increase Would Exclude Millions of Low-Income Children, Study Finds

New York Times

05-06-2025

While the giant domestic policy bill that Republicans pushed through the House last monthincludes tens of billions of dollars to increase child-rearing subsidies, millions of low-income children would not benefit because their parents earn too little, a new analysis shows.
The change involves the child tax credit, a once-obscure segment of the tax code that distributes about $110 billion a year and has ignited partisan debates over poverty and inequality. Republicans say their support for the credit, which President Trump doubled in his first term, shows concern for ordinary families, while Democrats fault income tests that exclude the neediest parents.
The G.O.P. bill raises the maximum credit to $2,500 per child, from $2,000, and includes virtually all middle- and upper-income families. But a third of children would not receive the full credit because their parents have low wages or lack jobs, according to the Center on Poverty and Social Policy at Columbia University. Families must reach income targets to receive the full benefit.
Of the 22 million low-income children who would be denied the full credit under the House bill, 17 million would receive no additional help from the House bill, and five million would receive only part of the $500 increase, the study found. Those excluded from the maximum aid include 65 percent of children with single mothers, 51 percent of Black children, 44 percent of Latino children and 40 percent of children in rural areas.
'This is a very large federal expenditure on children, but low- and moderate-income families won't receive the full benefit, and that's where the money would do the most good,' said Sophie Collyer, a Columbia researcher and co-author of the study.
The plan to raise the credit, which would cost nearly $25 billion a year, renews partisan jousting over the program's purpose. Republicans see it primarily as a tax cut, so they direct it toward families who owe income tax, although some needy families with no income tax bills receive partial payments. Democrats would give the credit to all low-income parents, regardless of how much they work or earn, essentially creating an income guarantee to fight child poverty.
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