President Donald Trump signed his “big beautiful” spending bill into law on July 4.
One provision is an increase to the maximum child tax credit, raising it from $2,000 per eligible child to $2,200 beginning in 2026. The 2017 Tax Cuts and Jobs Act temporarily increased the credit from $1,000 to $2,000, but was set to expire after 2025 without action from Congress.
The child tax credit is a partially refundable tax credit available to taxpayers with children or dependents under age 17 who meet certain eligibility requirements, including having a Social Security number and living with the taxpayer for at least half of the year. Trump’s legislation also requires at least one taxpayer claiming the credit to have a Social Security number.
Parents and guardians must earn $200,000 a year or less, or $400,000 for joint filers, to claim the full credit for each dependent. The credit is decreased by 5% for every $1,000 earned over those thresholds.
The refundable portion of the credit — known as the additional child tax credit — is worth up to $1,700 in 2025. Starting in 2026, the credit will be indexed for inflation.
The expanded tax credit will cost the federal government around $817 billion over the next 10 years, according to the Congressional Budget Office’s estimates. In total, the bill is expected to add $3.3 trillion to the federal deficit over the next 10 years, per the CBO.
Low-income families left out
While the dollar amount is higher, the number of American families seeing the full added benefit will likely not grow because the new legislation does not expand eligibility rules. The CTC increase will mostly benefit middle- and high-income earners who qualify for the maximum amount.
“The target of taxpayers that are going to benefit from this credit should be almost exactly the same as what it was before,” Miguel Burgos, a certified public accountant and TurboTax expert, tells CNBC Make It. “It’s just that they’ll be getting a little bit more on the non-refundable part of the credit.”
Currently, around 17 million children do not qualify for the entire $2,000 benefit because their families’ incomes are too low, according to estimates from the Tax Policy Center. Nearly 3 million children who may have previously qualified for the tax credit could lose access because of the parental Social Security number requirement, based on a Brookings Institute analysis of American Community Survey data.
Low-income taxpayers — generally those making less than $2,500 a year — who don’t owe taxes in 2025 cannot claim any portion of the credit. Those earning more may qualify for up to $1,700 from the refundable portion of the credit if the rest of the credit covers their tax liability.
In general, taxpayers broadly enjoy the benefit of receiving the child tax credit each year, Burgos says.
“The credit is very relevant to taxpayers and it does make a difference, and they look forward to [claiming] it,” he says. “Based on their reactions and their eagerness to claim the credit and maximize it as much as they can within the boundaries of the law, we can say it’s very relevant, and it does fulfill a fundamental part of maximizing and getting their maximum possible refund.”
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