What Trump’s Presidency Could Mean for the Child Tax Credit
Written by
Nicholas Morine
Edited by
Jasmine Browley
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As Donald Trump once again takes office for his second and final U.S. presidential term, questions concerning his proposed economic policy measures continue to loom.
Many details concerning his potential tax policy have been hotly debated by analysts on TV broadcasts and podcasts. One particular aspect of Trump’s tax policy, his view on the child tax credit, remains a particularly hot-button issue.
President Trump Is Likely To Increase The Child Tax Credit
In 2017, during his first term in office, President Trump expanded the child tax credit to $2,000 from its previous level of $1,000, of which $1,600 is refundable.
What a refundable tax credit (or portion thereof) means is that taxpayers receive the full value of the credit back as they file taxes. A nonrefundable tax credit (or portion thereof) can only be applied to a taxpayer’s income tax liability, by contrast.
Enacted as part of Trump’s Tax Cuts and Jobs Act of 2017 (TCJA), the plan was criticized by opponents for expanding the range of eligibility upward — families earning up to $400,000 per year were now eligible, whereas before that threshold was $110,000 — as well as for the fact that the credit was only partially refundable, as The New York Times outlined.
On the other hand, President Joe Biden’s American Rescue Plan of 2021 temporarily boosted the child tax credit to $3,600 per child under the age of 6, and $3,000 per child aged 6 to 17. This credit was fully refundable and also could be garnered as part of a monthly benefit payout. Following that temporary boost in 2021, Congress opted not to renew the plan, and the child tax credit reverted to the level it had been boosted to by Trump.
Republican senators have since voted against further enhancement of the child tax credit as pushed for by Democrats, with the most recent instance taking place on Aug. 1, 2024, per CNET.
Vice President-Elect Vance’s Thoughts On The Child Tax Credit
In an Aug. 11, 2024, interview with CBS News, Vice President-elect JD Vance stated that both he and Trump are amenable to raising the child tax credit if they take office.
“President Trump and I have proposed that [to expand the child tax credit],” said Vance. “I mean, look, I’d love to see a child tax credit that’s $5,000 per child. But you, of course, have to work with Congress to see how possible and viable that is. We’ve also proposed legislation, Margaret, to end this practice of parents getting these surprise medical bills where they go to the hospital, they have a baby, they chose an out of network provider, and they come home with unexpected bills. I’ve actually sponsored legislation to end that practice. So we have a whole host of pro-family policies that are out there.”
With the expansion of the TCJA being modeled by The Tax Foundation, it seems this is at least a baseline Americans can expect from the latest commander-in-chief. Whether Trump, JD Vance, or other Republican officials decide to further expand the child tax credit beyond this base remains an unanswered question at this point in time.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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