Greetings—

As the debate on the reconciliation bill moves back to the House, experts at the Urban-Brookings Tax Policy Center (TPC) are analyzing the impacts of proposed changes to the CTC on children and their families. In new resources from 2025 Reconciliation and the Child Tax Credit, a webpage that provides key background information, estimates from TPC’s microsimulation model, and research and analysis, the researchers find:

While the current House and Senate plans increase the maximum CTC, they could do more to help low-income families. As written, the benefits would not increase for the 17 million families currently receiving less than today’s $2,000 maximum benefit, but research shows that increasing the CTC for low-income children generates the greatest return on investment.
Modeled options to reform the CTC and top individual income tax rate include increasing the CTC to $2,500, raising the top individual income tax rate to 39.6 percent, increasing the maximum refundable amount to $2,000, and phasing in the CTC.
Concerns that the CTC would discourage parents from working are overstated, and there are ways to expand the CTC that would increase parents’ employment. The “enhanced phase-in option” would allow larger families to receive the maximum benefit at lower income levels and increase employment slightly, especially for unmarried mothers. Restoring the $3,600 refundable CTC for children under the age of two would provide needed support to families with infants whose child care costs are often highest.