Millions of U.S. kids could lose the Child Tax Credit under GOP budget bill, experts say

The Republican-backed budget package has proposed a new restriction for the federal Child Tax Credit that could potentially impact millions of children who are U.S. citizens or legal residents. This new requirement states that both the tax filer and their spouse must have Social Security numbers in order to claim the Child Tax Credit for their children. This means that children with mixed-status parents, such as one parent who is a U.S. citizen and the other who is not, would no longer qualify for the tax credit. Additionally, children born in the U.S. to undocumented parents or parents with non-working visas would also be excluded from receiving the benefit.

The intention behind this restriction is to prevent tax breaks from going to undocumented immigrants. However, the unintended consequence is that it could deny the tax credit to millions of children in the U.S. who currently qualify for the benefit. The Child Tax Credit, which currently amounts to $2,000 per eligible child, has been proven to lift children out of poverty. The proposed bill aims to increase the CTC to $2,500 for three years and adjust the tax credit annually for inflation to prevent its value from eroding over time.

It is estimated that approximately 4.5 million children could be affected by this new restriction, with the highest number of impacted children residing in California, Texas, and Florida. This policy change could have a significant impact on families across the country, particularly those who rely on the Child Tax Credit to meet their basic needs.

Under the GOP bill, both spouses in a household must have a Social Security number to qualify for various tax breaks, creating different tax rules for individuals married to spouses without Social Security numbers or immigrants with legal status but without Social Security numbers. This could result in children being treated differently based on their parents’ immigration status.

The Child Tax Credit, established in 1997, received a boost in President Trump’s 2017 Tax Cuts and Jobs Act, doubling the credit to $2,000 per eligible child. The Republican tax bill aims to increase the CTC to $2,500 per child from 2025 to 2028, after which it would revert to $2,000. Eligible parents can claim the CTC when filing their taxes, helping them reduce their tax liability or receive a tax refund.

Efforts to expand the CTC last year were met with opposition in the Senate, highlighting the ongoing debate surrounding this critical tax credit. It is essential to consider the impact of these policy changes on families who rely on the Child Tax Credit to support their children’s well-being and future opportunities.