Child Tax Credit Faces Uncertain Future as Key Provisions Set to Expire

WASHINGTON — Millions of American families could face a significant reduction in their child tax credit benefits after 2025 unless Congress takes action to extend key provisions of the Tax Cuts and Jobs Act (TCJA) of 2017. The temporary increase in the maximum credit from $1,000 to $2,000 per child under 17 is set to expire, potentially impacting tax 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 recent hearing addressing the expiring tax break. The TCJA also widened eligibility by raising income phaseout thresholds, but it capped the refundable portion of the credit, disproportionately affecting lower-income families.

Chuck Marr, vice president for federal tax policy at the Center on Budget and Policy Priorities, criticized the current structure, stating, “The child tax credit is upside down because it gives more benefits to higher-income people than lower-income people.” A December analysis by the Tax Policy Center estimated that millions of children under 17 with lower-income parents would not receive the full value of the credit in 2025.

Despite bipartisan concerns, efforts to extend the enhanced credit have faced challenges. In January 2024, House lawmakers passed a bill to expand the child tax credit, including retroactive increases to the refundable portion for 2023. However, Senate Republicans have expressed reservations about the policy’s cost and design, though they remain open to future negotiations.

The debate unfolds amid growing fiscal pressures. The U.S. Department of the Treasury reported a three-month fiscal year 2025 deficit of $710.9 billion in December, nearly 40% higher than the same period the previous year. With trillions in competing priorities, the future of the child tax credit remains uncertain, leaving families in limbo.