The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

The Child Tax Credit: Selected Legislative
August 28, 2020
Proposals in the 116th Congress
Margot L. Crandall-Hollick
Under current law, the child tax credit reduces the amount families owe in income tax (i.e.,
Acting Section Research
income tax liability) by up to $2,000 per eligible child. The credit is reduced for higher-income
Manager
families. The credit is refundable, so lower-income families who owe little or nothing in income

taxes may also receive some benefit. Due to the formula used to calculate the refundable portion
of the credit, the lowest-income families receive less than the maximum credit.

Research indicates that the child tax credit increases the after-tax incomes of most families with children. Benefits, however,
tend to be smaller for the poorest and wealthiest families with children. Because the credit amount gradually phases in for
lower-income families, they are less likely to receive the child credit than moderate- and some higher-income families and
tend to receive a smaller credit. Estimates from the Tax Policy Center indicate that approximately 90% of all taxpayers with
children receive the child tax credit, averaging $2,370 per taxpayer. In contrast, among the poorest families with children
(income under $10,000), slightly less than half receive the credit (47.8%), averaging $250 per taxpayer in that income group
(including nonrecipients). Because the credit phases out for the highest income taxpayers, they are also less likely to receive
the child credit and receive a smaller credit on average.
In recent years, there has been interest in providing direct benefits to families with children to reduce child poverty in th e
United States, sometimes in the form of tax benefits like the child credit. In the 116th Congress, legislators have introduced
numerous bills that would substantially expand the child tax credit, especially for lower-income families. These proposals
include the Economic Mobility Act of 2019 (EMA; H.R. 3300), the Working Families Tax Relief Act of 2019 (WFTRA; S.
1138 and H.R. 3157), and the American Family Act of 2019 (AFA; S. 690 and H.R. 1560).
 Economic Mobility Act (EMA): The EMA would create a flat $2,000 per child credit ($3,000 for young
children under four years old) for all taxpayers with income below $200,000 ($400,000 if married filing
jointly). This would increase the amount of the credit for many low-income families who currently receive
less than the maximum credit. These changes would be temporary and, as drafted, in effect for 2019 and
2020.
 Working Families Tax Relief Act (WFTRA): The WFTRA would create a flat $2,000 per child credit
($3,000 for young children under six years old) for all taxpayers with income below $150,000 ($200,000 if
married filing jointly). Taxpayers with higher income would receive a reduced credit. This would increase
the amount of the credit for many low-income families who currently receive less than the maximum credit.
These changes would be permanent.
 American Family Act (AFA): The AFA would increase the child credit to $3,000 per child ($3,600 for
young children under six years old) for taxpayers with income below $130,000 ($180,000 if married filing
jointly), with the credit phasing out above these income levels. These changes would be permanent.

Each bill would eliminate the credit’s current phase-in (i.e., make it fully refundable) and create a larger credit for younger
children, as illustrated in the figure on the next page. In some proposals, the credit would phase out at lower levels of income
than under current law. These bills are generally targeted at providing increased benefits to lower-income children, although
some moderate- and higher-income families would benefit from the larger credit for young children. If the AFA or WFTRA
were to become law, some higher-income families would receive a smaller credit. In comparison, if the EMA were to become
law, no families would receive a smaller credit than they do under current law (the credit amount would be the same or
greater).
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The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

Child Credit Amounts by Income for Selected Legislation
Unmarried Taxpayer with One Qualifying Child

Source: CRS analysis of selected legislation. For more information, see Table 3 and Figure 5 in this report.
Note: A stylized example assuming al three legislative proposals would concurrently be in effect in 2020 (if enacted).

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Contents
Introduction ................................................................................................................... 1
Child Tax Credit: Current Law .......................................................................................... 1
How is the child credit calculated under current law? ...................................................... 1
What is the legislative history of the child credit? ........................................................... 5
What is the impact of the child credit? .......................................................................... 6
Selected Legislation in the 116th Congress........................................................................... 9
The Economic Mobility Act of 2019 (EMA; HR. 3300) ................................................... 9
The Working Families Tax Relief Act of 2019 (WFTRA; HR. 3157/S. 1138) .................... 11
The American Family Act of 2019 (AFA; HR. 1560/S. 690) ........................................... 12

Figures
Figure 1. Child Tax Credit Amount and Share of Taxpayers with Child Tax Credit
Eligible Children by Income .......................................................................................... 3
Figure 2. Economic Mobility Act (EMA) Child Credit Amount by Income............................. 10
Figure 3. Working Families Tax Relief Act (WFTRA) Child Credit Amount by Income ........... 12
Figure 4. American Family Act (AFA) Child Credit Amount by Income ................................ 13
Figure 5. Child Tax Credit Amount Under AFA, EMA, and WFTRA by Income ..................... 17

Tables
Table 1. Child Tax Credit Parameters Under Current Law...................................................... 4
Table 2. Share of Taxpayers Who Receive the Child Credit and Average Credit Amount,
by Income Level in 2019 ............................................................................................... 7
Table 3. Major Changes to the Child Tax Credit under Selected Legislative Proposals ............. 15

Contacts
Author Information ....................................................................................................... 19

Congressional Research Service

The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

Introduction
In the 116th Congress, legislators have introduced numerous bil s that would expand the child tax
credit, including the Economic Mobility Act of 2019 (EMA; H.R. 3300), the Working Families
Tax Relief Act of 2019 (WFTRA; S. 1138 and H.R. 3157), and the American Family Act of 2019
(AFA; S. 690 and H.R. 1560).1 These bil s would increase the credit amount for lower-income
families and families with young children. This report summarizes and compares these proposals,
as wel as other provisions of these bil s that change credit eligibility. The report begins with a
brief overview of the child tax credit under current law, including a short summary of its
legislative history and recent research on its impact.
Child Tax Credit: Current Law
The child tax credit reduces the amount families owe in income tax (i.e., income tax liability) by
up to $2,000 per eligible child. The credit is reduced for higher-income families. The credit is
refundable, so lower-income families who owe little or nothing in income taxes may also receive
some benefit. Due to the formula used to calculate the refundable portion of the child credit, these
families general y receive less than the maximum credit.2
What is a “taxpayer”?
For the purposes of this report, a taxpayer refers to al individuals listed on a federal income tax return (IRS Form
1040). Hence, an individual, their spouse (if married), and any dependents are considered one taxpayer. Other
analyses sometimes refer to taxpayers as “tax units.” For ease of reading, the terms taxpayer and family wil be
used interchangeably in this report, although in other CRS analyses these terms may differ.
How is the child credit calculated under current law?
Under current law, the child tax credit al ows eligible taxpayers to reduce their federal income tax
liability by up to $2,000 per qualifying child. A qualifying child is general y the taxpayer’s
dependent child who is under 17 years old. The maximum credit a taxpayer can receive is equal
to the number of qualifying children multiplied by $2,000.
If a taxpayer’s income tax liability is less than the maximum value of the child tax credit, the
taxpayer may be eligible to receive al or part of the difference as a refundable credit calculated
using the earned income formula. The refundable portion of the child tax credit—that is, the
amount which is greater than taxes owed—is often referred to as the additional child tax credit or
ACTC. On the federal income tax return, the ACTC is claimed on a separate line after the

1 T his report does not summarize bills that would exclusively change eligibility requirements for the credit or would
permanently extend temporary provisions enacted under P.L. 115-97. T his report also does not summarize the
Advancing Support for Working Families Act (S. 2976/H.R. 5296), a proposal to allow taxpayers to elect to receive an
increased child credit upon the arrival of a new child that is later repaid as an increase in general income tax liability
over time. A summary of the Advancing Support for Working Families Act can be found in CRS Report R46390, Paid
Fam ily and Medical Leave: Current Policy and Legislative Proposals in the 116th Congress, by Molly F. Sherlock,
Barry F. Huston, and Sarah A. Donovan. T o date, there have not been any legislative proposals in the 116th Congress
intended to broadly reduce the size of the child tax credit across qualifying taxpayers (although, as discussed below,
certain proposals would reduce the credit amount for higher-income taxpayers).
2 T he terms child tax credit and child credit are used interchangeably throughout this report.
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nonrefundable portion of the child credit (the portion of the credit that reduces federal income tax
liabilities). The sum of the nonrefundable portion plus the ACTC (the refundable portion) cannot
exceed the maximum credit. Under the earned income formula, the ACTC gradual y increases, or
phases in, as earned income increases (i.e., the credit’s “phase-in” range). Specifical y, under this
formula the ACTC equals 15% of a taxpayer’s earned income in excess of $2,500, up to $1,400
per qualifying child (the maximum amount of the ACTC).3 For example, if a taxpayer has a $200
income tax liability and one qualifying child, the taxpayer could first use the credit to reduce
income tax liability to zero and then receive up to $1,400 as the ACTC, for a total credit of up to
$1,600.4 CRS estimates that about one in every five taxpayers (19%) with a credit-eligible child
have low incomes that situate them in the credit’s phase-in range, as il ustrated in Figure 1. These
taxpayers, by definition, receive less than the maximum credit and general y receive some or al
of the credit as the ACTC.
The credit is reduced in value, or phases out, by $50 for every $1,000 of income over specified
thresholds—$200,000 for unmarried taxpayers and $400,000 for married couples who file joint
tax returns.5 The phaseout thresholds are not adjusted for inflation. As il ustrated in Figure 1,
CRS estimates that most eligible families have income that places them in the credit’s “plateau,”
where they would receive the maximum credit amount. A smal share of high-income families
receive little if any credit due to the phaseout.
A taxpayer must provide the qualifying child’s social security number (SSN) to receive the credit.
The taxpayer must also provide their taxpayer ID and, if married filing jointly, their spouse’s
taxpayer ID to receive the credit. For the taxpayer (and if applicable, their spouse) this ID can be
either an SSN or an individual taxpayer identification number (ITIN).6 Although using an ITIN
does not necessarily mean an individual is unlawfully present, the IRS and the Treasury Inspector
General for Tax Administration have concluded that a large proportion of ITIN filers are
unlawfully present aliens working in the United States.7
Residents of the territories general y do not receive the federal child credit, although families
residing in U.S. territories with three or more children may receive the ACTC using an alternative
formula.8

3 T his amount is annually indexed to inflation, rounded down to the next lowest multiple of $100. T o date, this inflation
adjustment has not been triggered.
4 T his is less than the maximum of $2,000 per child because the maximum amount of the credit that ca n be received as
a refund—that is, the ACT C—is capped at $1,400. If the maximum ACT C were $2,000, the same taxpayer could
receive up to $2,000 in the child tax credit: $200 as a reduction in income tax liability, and $1,800 as the ACT C.
5 Income for the purposes of phasing out the child tax credit is modified adjusted gross income (MAGI) , which is
Adjusted Gross Income (AGI) increased by foreign-earned income of U.S. citizens abroad, including income earned in
Guam, American Samoa, the Northern Mariana Islands, and Puerto Rico.
6 Federal tax law requires that taxpayers provide a taxpayer identification number in order to file returns and other
documents, and for most taxpayers that tax ID is their SSN. T he Internal Revenue Service (IRS) issues IT INs to enable
individuals who are not eligible for an SSN to comply with federal tax law. IRC §§6109, 7701(a)(41); T reas. Reg.
§301.6109-1.
7 For more information, see CRS Report R43840, Federal Income Taxes and Noncitizens: Frequently Asked Questions,
by Erika K. Lunder and Margot L. Crandall-Hollick.
8 For all families (including those in U.S. territories) with three or more qualifying children, they can calculate the
ACT C using an alternative formula. T he alternative formula is the amount by which Social Security taxes paid exceed
the earned income tax credit (EIT C) up to the maximum refundable credit. For most families, the ACT C under the
earned income formula will be larger than the ACT C under the alternative for mula. However, because residents of U.S.
territories are generally ineligible for the EIT C, the formula effectively equals the lesser of their Social Security taxes
paid or their maximum ACT C. Under the alternative formula, taxpayers with one or two qualif ying children are
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The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

Figure 1. Child Tax Credit Amount and Share of Taxpayers with Child Tax Credit
Eligible Children by Income

Source: Top panel: Internal Revenue Code (IRC) Section 24 and P.L. 115-97. Bottom panel: CRS estimates using
TRIM3 and the ASEC 2017 applied to the current IRC (i.e., IRC as amended by P.L. 115-97). For more
information on TRIM3, see Appendix A in CRS Report R45971, The Impact of the Federal Income Tax on Poverty:

effectively ineligible for the ACT C.
Residents of American Samoa who file an American Samoan tax return may claim the nonrefundable portion of the
child tax credit against their America Samoan income taxes. For residents of American Samoa who have three or more
qualifying children, they may also claim the ACT C, but only under the alternative formula. T he T reasury covers the
cost of any amount of the ACT C provided to America Samoan residents under the alternative formula. Puerto Rico has
no child tax credit under Puerto Rican tax law. Puerto Rican residents with three or more qualifying children may claim
the federal ACT C under the alternative formula, but only if they file Form 1040 -SS with the Internal Revenue Service
(IRS). Residents of mirror-code territories (Guam, the Commonwealth of the Northern Mariana Islands, and the U.S.
Virgin Islands) may claim the child credit (including the ACT C) under both the earned income formula and the
alternative formula as part of their respective territorial systems. T he T reasury covers the cost of any amount of the
ACT C provided to mirror-code territory residents under the alternative formula (it is unclear if the T reasury also covers
the cost of the ACT C under the earned income formula).
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Before and After the 2017 Tax Revision (“TCJA”; P.L. 115-97), by Margot L. Crandal -Hol ick, Gene Falk, and Jameson
A. Carter.
Notes: Top panel: A stylized example assuming the taxpayer has one qualifying child and al income is earned
income, with no other sources of income and no above-the-line deductions. In actuality, the ACTC is calculated
based on earned income and the credit is phased down based on modified adjusted gross income (MAGI).
Married refers to married taxpayers filing joint returns. The “notch” in the graph when the credit amount equals
$1,400 (the vertical axis) occurs when the maximum ACTC amount has been reached. Bottom panel: Estimates
of al taxpayers (filers and nonfilers) who have at least one child who is eligible for the child tax credit by
adjusted gross income (AGI). TRIM3 uses data from the 2017 Annual Social and Economic Supplement (ASEC)
to the Current Population Survey (CPS), representing income received and tax liabilities or benefits accru ed
during calendar year 2016 as wel as eligibility as if current law (i.e., the IRC as amended by P.L. 115-97) were in
effect in 2016. Taxpayers cannot receive the credit for otherwise eligible children without SSNs, and hence these
children are not considered child credit eligible for purposes of these estimates.
Many of the child tax credit’s current parameters are temporary and in effect from 2018 through
2025 as a result of changes made by P.L. 115-97 (often referred to as the Tax Cuts and Jobs Act or
TCJA).9 These parameters, and those in effect after 2025, are summarized in Table 1. For more
information on the child tax credit under current law, see CRS Report R41873, The Child Tax
Credit: Current Law, by Margot L. Crandal -Hollick.
Table 1. Child Tax Credit Parameters Under Current Law
Current Law
Parameter
(2018-2025)
(2026- )
Credit Amount
Maximum Credit
$2,000 per child 0-16 years old.
$1,000 per child 0-16 years old.
Amount
Maximum Additional
$1,400a per child aged 0-16 years old.
$1,000 per child aged 0-16 years old.
Child Tax Credit
(ACTC)
Refundability Formula
15% of earnings above $2,500, not to
15% of earnings above $3,000, not to
for ACTC
exceed the maximum of $1,400 per
exceed the maximum of $1,000 per
child.
child.
Phaseout Threshold
$400,000 married filing jointly
$110,000 married filing jointly
$200,000 head of household & single
$75,000 head of household & single
$200,000 married filing separately
$55,000 married filing separately
Phaseout Rate
Credit is reduced by $50 for every
Credit is reduced by $50 for every
$1,000 (or fraction thereof) above the
$1,000 (or fraction thereof) above the
phaseout threshold.
phaseout threshold.
Other Provisions
Qualifying Child ID
Social Security Number (SSN)
SSN or individual taxpayer identification
Requirements
number (ITIN)
Payment Frequency
Annual
Same as 2018-2025

9 T he law’s original title, the T ax Cuts and Jobs Act, was stricken before final passage because it violated the Byrd rule,
a procedural rule that can be raised in the Senate when bills, like the tax bill, are considered under the process of
reconciliation. T he law’s actual title is “ T o provide for reconciliation pursuant to titles II and V of the concurrent
resolution on t he budget for fiscal year 2018.”
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Current Law
Parameter
(2018-2025)
(2026- )
Eligibility to Residents
Residents of the territories general y
Same as 2018-2025
of Puerto Rico and
do not receive the federal child credit,
Other Territories
although families in territories with
three or more children may receive the
ACTC using an alternative formula.a
Source: CRS analysis of IRC Section 24, P.L. 115-97, and Joint Committee on Taxation, JCX-17-20.
Notes:
a. Annual y adjusted for inflation.
b. The alternative formula is the amount by which Social Security taxes paid exceed the earned income tax
credit (EITC) up to the maximum refundable credit. Because residents of territories are general y ineligible
for the EITC, the formula effectively equals the lesser of their Social Security taxes paid or their maximum
ACTC. For more information, see Joint Committee on Taxation, JCX-17-20.
What is the legislative history of the child credit?
When it was initial y enacted in 1997, the child tax credit was a $500-per-child nonrefundable
credit designed to provide tax relief to middle- and upper-middle-income families. According to
the Joint Committee on Taxation
Congress believed that [prior to the child tax credit] the individual income tax structure
[did] not reduce tax liability by enough to reflect a family’s reduced ability to pay taxes as
family size increases.... The Congress believed that a tax credit for families with dependent
children will reduce the individual income tax burden of those families, will better
recognize the financial responsibilities of raising dependent children, and will promote
family values.10
Subsequent legislative changes modified key parameters of the credit, expanding eligibility to
more low-income families and increasing the credit’s size. The first significant change to the
child tax credit occurred when the Economic Growth and Tax Relief Reconciliation Act of 2001
(EGTRRA; P.L. 107-16) was enacted. EGTRRA increased the amount of the credit to $1,000 per
child.11 In addition, as a result of EGTRRA, certain low-income taxpayers with earned income
over $10,000 became eligible to receive part or al of the child credit as the ACTC using the
earned income formula.12 Similar to current law, under this formula the ACTC was equal to 15%
of earned income above the refundability threshold ($10,000) up to the maximum credit amount.

10 For more information, see U.S. Congress, Joint Committee on T axation, General Explanation of Tax Legislation
Enacted in 1997, JCS-23-97, December 17, 1997, pp. 6-7.
11 Under EGT RRA, the maximum amount of the child credit was originally scheduled to phase in to $1,000 per child
by 2010, at which point this change was scheduled to expire and revert to $500 per child. Legislation enacted in 2003
accelerated this phase-in such that by 2003 the maximum child credit was $1,000 per child. P.L. 111-312 extended the
$1,000 per child amount for 2011 and 2012, and this change was ultimately made permanent by P.L. 112-240. For
more information, see T able 2 in CRS Report R45124, The Child Tax Credit: Legislative History, by Margot L.
Crandall-Hollick.
12 According to the T ax Policy Center, “The refundable CT C was originally designed in 2001 to coordinate with the
earned income tax credit (EIT C). Once earnings reached $10,020 for families with two children in 2001, there was no
further increase in the EIT C. T he earnings threshold for the refundable CT C was set at $10,000 so families could now
receive a subsidy for earnings in excess of that amount. Like the earned income amount for the EITC, the $10,000
earnings threshold was indexed for inflation. When the earnings threshold for the refundable CT C was reduced—first
to $8,500 in 2008 and then to $3,000 in 2009 —that link between the phase-in of the refundable CT C and the EIT C was
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In 2008 and 2009, Congress passed laws—the Emergency Economic Stabilization Act of 2008
(EESA; P.L. 110-343 ) and the American Recovery and Reinvestment Act of 2009 (ARRA; P.L.
111-5)—that further expanded the availability and amount of the credit to taxpayers whose
income was too low to either qualify for the credit or be eligible for the full credit. EESA lowered
the refundability threshold from $10,000 to $8,500 for 2008. ARRA lowered the refundability
threshold further to $3,000 for 2009 through 2010, a change that was eventual y made permanent
by the Protecting Americans from Tax Hikes (PATH) Act of 2015 (Division Q of P.L. 114-113).
At the end of 2017, Congress passed the TCJA (P.L. 115-97), which, in addition to making
numerous other changes to the tax code, temporarily modified the child tax credit. The TCJA
increased the maximum amount of the credit to $2,000 per child, increased the maximum amount
of the refundable portion of the credit (i.e., the maximum ACTC) to $1,400, increased the income
level at which the credit begins to phase out, and reduced the refundability threshold from $3,000
to $2,500. For many taxpayers, the TCJA expansion of the child credit offset other changes in the
law that would have increased tax liabilities, including the law’s temporary suspension of the
personal exemption.13
What is the impact of the child credit?
The child tax credit increases the after-tax incomes of al but the poorest and wealthiest families
with children, as il ustrated in Table 2. Lower-income families are less likely to receive the child
credit under current law than moderate- and some higher-income families and tend to receive a
smal er credit. Estimates from the Tax Policy Center (Table 2) indicate that approximately 90%
of al taxpayers with children receive the child tax credit, averaging $2,370 per taxpayer. In
contrast, among the poorest families with children (income under $10,000), slightly less than half
receive the credit (47.8%), averaging $250 per taxpayer in that income group (including
nonrecipients). Low-income families are less likely to have income tax liability and have less
earned income compared to higher-income families. Low levels of tax liability limit the amount
of the nonrefundable portion of the credit, while low levels of earned income limit the amount of
the ACTC. The highest-income families are also less likely to receive the child credit and receive
a smal er credit on average, as il ustrated in Table 2, as a result of the credit’s phaseout. For
example, among some of the wealthiest families with children (income between $500,000 and $1
mil ion), less than half receive the credit (38.6%), which averages $930 per taxpayer in that
income group.

broken.” See T ax Policy Center, What is the child tax credit? Briefing Book, May 2020,
https://www.taxpolicycenter.org/briefing-book/what -child-tax-credit.
13 Elaine Maag, The Tax Cuts and Jobs Act’s bottom line for families? Not much change, American Enterprise Institute,
October 4, 2019, https://www.aei.org/economics/the-tax-cuts-and-jobs-acts-bottom-line-for-families-not-much-change/
; and Isabel V. Sawhill and Christopher Pulliam, Lots of plans to boost tax credits: which is best? Brookings Institution,
January 15, 2019, https://www.brookings.edu/research/lots-of-plans-to-boost -tax-credits-which-is-best/.
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Table 2. Share of Taxpayers Who Receive the Child Credit and
Average Credit Amount, by Income Level in 2019
% of
Taxpayers
Child Tax
who Receive
Credit as % of
Average Child
% of All
the Child
After-Tax
Credit per
Income Levela
Taxpayers
Credit
Income
Taxpayer
TAXPAYERS WITH CHILDRENb
Less than $10,000
2.4
47.8
3.5
$250
$10,000-$20,000
8.5
68.0
4.8
$850
$20,000-$30,000
10.4
84.8
5.7
$1,520
$30,000-$40,000
8.6
90.8
6.2
$2,160
$40,000-$50,000
6.9
94.3
5.7
$2,450
$50,000-$75,000
13.6
96.4
5.0
$2,790
$75,000-$100,000
9.7
98.8
3.9
$2,980
$100,000-$200,000
23.7
99.5
2.6
$3,040
$200,000-$500,000
13.2
98.2
1.2
$2,790
$500,000-$1,000,000
1.8
38.6
0.2
$930
More than $1,000,000
0.8
0.5
0.0
$10
All
100
90.2
2.2
$2,370
ALL TAXPAYERS
Less than $10,000
7.2
4.9
0.5
$30
$10,000-$20,000
12.6
14.0
1.2
$170
$20,000-$30,000
11.3
24.2
1.8
$430
$30,000-$40,000
9.1
26.9
1.9
$620
$40,000-$50,000
7.6
26.8
1.7
$680
$50,000-$75,000
14.2
29.2
1.5
$810
$75,000-$100,000
9.5
32.1
1.3
$920
$100,000-$200,000
18.2
40.8
1.0
$1,210
$200,000-$500,000
8.2
48.4
0.6
$1,350
$500,000-$1,000,000
1.0
20.1
0.1
$480
More than $1,000,000
0.5
0.3
0.0
$10
All
100
28.2
0.9
$720
Source: Tax Policy Center Model T20-0091.
Notes: Taxpayers include both filers and nonfilers.
a. Income is defined as expanded cash income (ECI), which equals cash income plus certain other tax -exempt
forms of income and benefits like food stamps. These estimates include the $500 credit for non -child tax
credit eligible dependents.
b. Taxpayers with children are those eligible to claim an exemption for children at home or away from home
or with children qualifying for the child tax credit or earned income tax credit (EITC).
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Research indicates that the refundable portion of the child tax credit (the ACTC) in conjunction
with the larger earned income tax credit (EITC) reduces poverty, especial y child poverty. CRS
estimates that refundable tax credits (the ACTC and EITC) helped prevent 8.1 mil ion
individuals—of whom 4.2 mil ion were children—from fal ing into poverty in 2016.14 In the
context of the federal income tax system, these refundable tax credits helped to reduce poverty
among al individuals by more than two percentage points (from 14.5% to 12.3%), while reducing
child poverty by more than five percentage points (from 17.5% to 12.0%).15
In recent years, there has been increased interest in providing direct benefits to families with
children to reduce child poverty in the United States, sometimes in the form of tax benefits.16 The
National Academy of Sciences (NAS) included a “child al owance” as part of a package of
policies to reduce child poverty over 10 years.17 Other research has shown that increasing the
amount of the child credit that low-income families receive—for example, by eliminating the
current credit’s phase-in so that the credit is “fully refundable”—would substantial y reduce child
poverty.18 In addition, the IRS Taxpayer Advocate has proposed a near-universal child tax credit
in part to “acknowledge that families at al income levels need a minimum amount of resources to
adequately care for children.”19
Expanding the child tax credit would reduce federal income tax revenue. If enacted in isolation,
an expanded child tax credit would increase the budget deficit. Revenue losses associated with an
expanded child tax credit could be offset by increased revenue elsewhere in the tax system, or by

14 T hese amounts are estimated as if current tax law were in effect in 2016. Specifically, the microsimulation model
used to derive these estimates—the T RIM3 model—uses data from the 2017 Annual Social and Economic Supplement
(ASEC) to the Current Population Survey (CPS), representing income received and tax liabilities or benefits accrued
during calendar year 2016 as well as eligibility as if current law (i.e., the IRC as amended by P.L. 115-97) were in
effect in 2016.
15 See Figures 3 and 6 in CRS Report R45971, The Impact of the Federal Income Tax on Poverty: Before and After the
2017 Tax Revision (“TCJA”; P.L. 115-97), by Margot L. Crandall-Hollick, Gene Falk, and Jameson A. Carter, T he
Impact of the Federal Income T ax on Poverty: Before and After the 2017 T ax Revision (“TCJA”; P.L. 115-97), by
Margot L. Crandall-Hollick, Gene Falk, and Jameson A. Carter. Note that subsequent unpublished revisions to these
estimates by CRS found that the individual rate fell from 14.8% to 12.3% and the child poverty rate fell from 17.8% to
12.1% in 2016.
16 For example, see Jason DeParle, “T he T ax Break for Children, Except the Ones Who Need It Most,” The New York
Tim es, December 16, 2019, https://www.nytimes.com/2019/12/16/us/politics/child-tax-credit.html; and Dylan
Matthews, “Mitt Romney and Michael Bennet just unveiled a basic income plan for kids,” Vox, December 16, 2019,
https://www.vox.com/future-perfect/2019/12/16/21024222/mitt-romney-michael-bennet-basic-income-kids-child-
allowance.
17 T he report recommended a monthly benefit of $166 per child ($2,000 per child per year) or a $250 monthly benefit
($3,000 per child per year) as a replacement for the current child tax credit and personal exemption. According to
estimates from the National Academy of Sciences report, “The more substantial child allowance option, which would
replace the child tax credit and child tax exemption with a universal $3,000 payment per child per year ... would
generate a 5.3 percentage point reduction in poverty. T he less substantial child allowance option (with a $2,000 annual
payment, lower maximum eligibilit y age, and different phase-out) is estimated to produce a 3.4 percentage-point
poverty reduction.” See Chapter 5: “ T en Policy and Program Approaches to Reducing Child Poverty,” in T he National
Academies of Science, Engineering, and Medicine, A Roadm ap to Reducing Child Poverty (Washington, DC: T he
National Academies Press, 2019), p. 152, https://www.nap.edu/catalog/25246/a-roadmap-to-reducing-child-poverty.
18 See for example Robert Greenstein, Elaine Maag, Chye-Ching Huang, et al., Improving the Child Tax Credit for
Very Low–Incom e Fam ilies, U.S. Partnership on Mobility from Poverty, April 2018,
https://www.mobilitypartnership.org/improving-child-tax-credit -very-low-income-families.
19 See Part II in National T axpayer Advocate, Earned Income Tax Credit | Making the EITC Work for Taxpayers and
the Governm ent, Special Report to Congress, 2019, p. 16, https://taxpayeradvocate.irs.gov/objectivesreport2020-v3.
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link to page 19 link to page 21 The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

reduced spending. It could also be possible to design revenue-neutral changes in the child tax
credit, where the credit would be expanded for some tax payers while being reduced for others.
Selected Legislation in the 116th Congress
Several bil s introduced in the 116th Congress would expand the child credit—the Economic
Mobility Act of 2019 (EMA; H.R. 3300), the Working Families Tax Relief Act of 2019 (WFTRA;
S. 1138 and H.R. 3157), and the American Family Act of 2019 (AFA; S. 690 and H.R. 1560).
Each bil would eliminate the credit’s current phase-in (i.e., make the credit fully refundable) and
create a larger credit for younger children. In some proposals, the credit would phase out at lower
income levels than under current law. These bil s are general y targeted at providing increased
benefits to lower-income children, although some moderate- and higher-income families would
benefit from the larger credit for young children. Some higher-income families would, if the AFA
or WFTRA were to become law, receive a smal er credit. In comparison, if the EMA were to
become law, families would receive either the same credit or a larger credit. Each bil is briefly
summarized below and compared in Table 3 and Figure 5.
The Economic Mobility Act of 2019 (EMA; HR. 3300)20
The EMA would create a flat $2,000 per child credit ($3,000 for young children) for al taxpayers
with income below $200,000 ($400,000 if married filing jointly), with the credit phasing out
according to the same parameters as current law. This would increase the amount of the credit for
many low-income families who currently receive less than the maximum credit. These changes
would be temporary and, as drafted, in effect for 2019 and 2020. The major EMA modifications
to the child credit would include:
 Creating a larger credit for young children: The EMA would increase the per-
child credit amount to $3,000 for each of a taxpayer’s qualifying children aged
zero to three years old.
 Increasing the maximum ACTC: The bil would increase the maximum ACTC
amount from $1,400 to $2,000 per qualifying child ($3,000 for young children).
This change would eliminate the difference between the maximum refundable
and nonrefundable amounts of the CTC.
 Making the child credit fully refundable: The EMA would eliminate the phase-
in of the ACTC. As a result, eligible families with little or no income would be
able to receive the maximum amount of the CTC ($2,000 for children 4 to 16
years old; $3,000 for those 3 years old and younger). For these families, a large
share (and in some cases al ) of their child tax credit would be received as the
ACTC.
The bil would also authorize the Treasury to make payments to the territories to cover the full
cost of the child credit under this proposal (the nonrefundable and the refundable portion).21 Other

20 T he bill discussed in this report reflects the legislative text voted favorably out of comm ittee on June 20, 2019, and
reported to the House on February 4, 2020. For more information, see House Committee on Ways and Means, Markup
of T ax Legislation, 116th Cong., 1st sess., June 20, 2019, https://waysandmeans.house.gov/legislation/markups/markup-
hr-3298-child-care-quality-and-access-act-2019-hr-3299-promoting-respect and H.Rept. 116-384.
21 American Samoa and Puerto Rico (non-mirror code territories) would have to submit a plan to the T reasury to be
compensated for the full cost of the child credit. In addition, under this bill, taxpayers who claimed the child credit at
the territorial level (i.e., as part of their territorial income tax return), would be ineligible to claim it at the federal level.
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The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

aspects of the credit formula, including the $2,000 per child maximum credit (which would be
applicable only to older children under the bil ), the income level at which the credit begins to
phase out, and the credit’s phaseout rate, would be unchanged from current law.
According to the Joint Committee on Taxation (JCT), two of the EMA’s temporary changes to the
child tax credit—increasing the maximum ACTC and making the credit fully refundable (and the
permanent expansion of these changes to families in U.S. territories)—would cost $50.7 bil ion
over 10 years (2019-2029).22
The Child Credit Amount by Income Under the EMA
As il ustrated in Figure 2, the young child credit under the EMA would equal $3,000 per young
child for taxpayers with income under $200,000 ($400,000 for married joint filers). This credit
would then phase out by $50 for every $1,000 of income above $200,000 ($400,000 for married
joint filers). Hence, if a taxpayer had one young child, the credit would phase down over a range
of $60,000 and equal zero when income was $260,000 or more ($460,000 or more for married
joint filers).23 The older child credit under the EMA would equal the current-law child credit (in
other words, the lines for current law and the EMA overlap over this income range, as il ustrated
in Figure 5).24
Figure 2. Economic Mobility Act (EMA) Child Credit Amount by Income

Source: CRS analysis of H.R. 3300.

22 Joint Committee on T axation, Estimated Revenue Effects Of H.R. 3300, The “Economic Mobility Act Of 2019,”
Scheduled For Markup By The Com m ittee On Ways And Means On June 20, 2019 , June 18, 2019, JCX-29R-19. T he
$3,000 credit for children under four years old was added as an amendment during the Ways and Means Committee’s
consideration of H.R. 3300.
23 T he phaseout range would increase proportionally by number of children. T hus, if a taxpayer had three young
children, the credit would phase out over a range of $180,000 of income (e.g., from $200,000 to $380,000 for an
unmarried taxpayer).
24 Specifically, the credit would equal $2,000 for taxpayers with income under $200,000 ($400,000 for married joint
filers), phasing out over a $40,000 range of income per child at a rate of $50 for every $1,000 over the phaseout
threshold (e.g., from $200,000 to $240,000 for an unmarried taxpayer with one older child) .
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Notes: A stylized example assuming the taxpayer has one qualifying child and al income is earned income, with
no other sources of income and no above-the-line deductions claimed. Unmarried refers to taxpayers who file as
single and head of household, married refers to married taxpayers filing joint returns. Note that the changes
made by the EMA would be temporary and, as drafted, in effect in 2019 and 2020.
The Working Families Tax Relief Act of 2019 (WFTRA; HR. 3157/S.
1138)25
The WFTRA would create a flat $2,000 per child credit ($3,000 for young children) for al
taxpayers with income below $150,000 ($200,000 if married filing jointly). Taxpayers with
higher income would receive a reduced credit. This would increase the amount of the credit for
many low-income families who currently receive less than the maximum credit. These changes
would be permanent. The major WFTRA modifications to the child credit would include:
 Creating a larger credit for young children: The WFTRA would increase the
per-child credit amount to $3,000 for each of a taxpayer’s qualifying children
aged zero to five years old.
 Increasing the maximum ACTC: The bil would increase the maximum ACTC
amount from $1,400 to $2,000 per qualifying child ($3,000 for young children).
This change would eliminate the difference between the maximum refundable
and nonrefundable amounts of the CTC.
 Making the child credit fully refundable: The WFTRA would eliminate the
phase-in of the ACTC, making the credit fully refundable. Hence, families with
little or no income would receive the maximum amount of the child credit. For
these families, a large share (and in some cases al ) of their child tax credit would
be received as the ACTC.
 Changing the phaseout of the credit: The bil would lower the income threshold at
which the credit would begin to phase out to $150,000 ($200,000 for married joint filers).
This is a lower phaseout threshold in comparison to the current-law phaseout in effect
through 2025, although these thresholds would be higher than the phaseout levels
scheduled to be in effect beginning in 2026.
Other modifications include a provision to direct the IRS to pay the credit on a monthly basis
(e.g., a $3,000 annual credit for a young child would be paid as $250 monthly payments). Other
aspects of the credit formula, including the $2,000 per child maximum credit (which would be
applicable only to older children under the bil ), the child taxpayer ID requirements, and the rate
at which the credit phases out, would be unchanged from current law.
The Child Credit Amount by Income Under the WFTRA
As il ustrated in Figure 3, the young child credit under the WFTRA would equal $3,000 per
young child for taxpayers with income under $150,000 ($200,000 for married joint filers). This
credit would then phase out by $50 for every $1,000 of income above $150,000 ($20,000 for
married joint filers). Hence, if a taxpayer had one young child, the credit would phase out over a
range of $60,000 and equal zero when income was $210,000 or more ($260,000 or more for
married joint filers).26 The older child credit under the WFTRA would equal $2,000 per child

25 T he bills discussed in this report reflect the legislative texts as introduced.
26 T he phaseout range would increase proportionally by number of children. T hus, if a taxpayer had three young
children, the credit would phase out over a range of $180,000 of income (e.g., from $200,000 to $380,000 for an
unmarried taxpayer).
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The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

credit for taxpayers with income under $150,000 ($200,000 for married joint filers). The credit
for older children would phase out over a $40,000 range of income per child at a rate of $50 for
every $1,000 over the phaseout threshold (e.g., from $150,000 to $190,000 for an unmarried
taxpayer with one older child).
Figure 3. Working Families Tax Relief Act (WFTRA) Child Credit Amount by Income

Source: CRS analysis of H.R. 3157 and S. 1138.
Notes: A stylized example assuming the taxpayer has one qualifying child and al income is earned income, with
no other sources of income and no above-the-line deductions claimed. Unmarried refers to taxpayers who file as
single and head of household, married refers to married taxpayers filing joint returns.
The American Family Act of 2019 (AFA; HR. 1560/S. 690)27
The AFA would increase the child credit to a flat $3,000 per child ($3,600 for young children) for
taxpayers with income below $130,000 ($180,000 if married filing jointly), with the credit
phasing out above these income levels. Al the changes under the AFA would be permanent. The
major AFA modifications to the child credit would include:
 Creating a larger credit for young children: The AFA would increase the per-
child credit amount to $3,600 for each of a taxpayer’s qualifying children aged
zero to five years old.
 Increasing the maximum credit amount (including the ACTC): The bil
would increase the maximum credit (including the maximum ACTC) to $3,000
per qualifying child ($3,600 per young child). This change would eliminate the
difference between the maximum refundable and nonrefundable child credit
amounts, while also providing a larger credit for many moderate- and some
upper-income families that receive $2,000 per child credit under current law.
 Making the child credit fully refundable: The AFA would eliminate the phase-in of the
ACTC, making the credit fully refundable. Hence, families with little or no income would

27 T he bills discussed in this report reflect the legislative texts as introduced.
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The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

receive the maximum amount of the child credit. For these families, a large share (and in
some cases al ) of their child tax credit would be received as the ACTC.
 Changing the phaseout threshold and phaseout rate of the credit: The bil would
lower the income threshold at which the credit would begin to phase out to $130,000
($180,000 for married joint filers). The rate at which the credit would phase out would be
greater (15% for older children, 18% for younger children) than under current law (5%).
H.R. 1560 and S. 690 differ on the maximum age of an eligible older child. Under the House bil ,
the age limit would increase by a year and include 17-year-olds, whereas the Senate version
would retain the 16-year-old limit. Other modifications would include authorizing the Treasury to
make payments to the territories to cover the full cost of the child credit under this proposal (as
proposed under the EMA), increasing the credit’s payment frequency, and al owing taxpayers to
claim the credit for otherwise eligible children without SSNs (i.e., children with ITINs).
The Child Credit Amount by Income Under the AFA
As il ustrated in Figure 4, the young child credit under the AFA would equal $3,600 per child for
taxpayers with income under $130,000 ($180,000 for married joint filers). This credit would then
phase out by $180 for every $1,000 of income above $130,000 ($180,000 for married joint filers),
or an effective 18% phaseout rate.
Figure 4. American Family Act (AFA) Child Credit Amount by Income

Source: CRS analysis of H.R. 1560 and S. 690.
Notes: A stylized example assuming the taxpayer has one qualifying child and al income is earned income, with
no other sources of income and no above-the-line deductions claimed. Unmarried refers to taxpayers who file as
single and head of household, married refers to married taxpayers filing joint returns.
Hence, if a taxpayer had one young child, the credit would phase down over a range of $20,000
and equal zero when income was $150,000 or more ($200,000 or more for married joint filers).28

28 T he phaseout range would increase proportionally by number of children. T hus, if a taxpayer had three young
children, the credit would phase out over a range of $60,000 of income (e.g., from $130,000 to $190,000 for an
unmarried taxpayer).
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The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

The older child credit under the AFA would equal $3,000 for taxpayers with income under
$130,000 ($180,000 for married joint filers). As with the young child credit, the credit for older
children would phase out over a $20,000 range of income per child at a rate of $150 for every
$1,000 over the phaseout threshold (or an effective 15% phaseout rate). In other words, the
$3,000 credit would phase out between $130,000 and $150,000 for an unmarried taxpayer with
one older child.
A proposal similar to H.R. 1560 was included as part of the Heroes Act (H.R. 6800). The proposal
included the first three changes to the child tax credit included in the AFA (i.e., a $3,600 credit for
young children, a $3,000 credit for older children, and a fully refundable credit). The Heroes Act
child credit expansion would also expand the eligibility age to include 17-year-olds, direct the
IRS to pay out the credit monthly, and extend eligibility to residents of the territories. The Heroes
Act child credit expansion would be temporary and only in effect for 2020.29 According to JCT,
the temporary Heroes Act changes to the child tax credit would cost $118.8 bil ion over 10 years
(2020-2030).30

29 T he bill would not change the phaseout threshold or phaseout rate of the credit from current law. For more
information, see CRS Report R46358, Health and Econom ic Recovery Om nibus Em ergency Solutions (HEROES) Act:
Division B—Revenue Provisions, coordinated by Molly F. Sherlock. A similar expansion to the child tax credit was
also included in the T ake Responsibility for Workers and Families Act ( H.R. 6379). For more information, see CRS
Report R46283, The Take Responsibility for Workers and Fam ilies Act: Division T—Revenue Provisions, coordinated
by Molly F. Sherlock.
30 Joint Committee on T axation, Estimated Revenue Effects of T he Revenue Provisions Contained In H.R. 6800, T he
“Health And Economic Recovery Omnibus Emergency Solutions ('Heroes’) Act,” Scheduled For Consideration By
T he House Of Representatives On May 15, 2020, May 15, 2020, JCX-15-20.
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Table 3. Major Changes to the Child Tax Credit under Selected Legislative Proposals
Working Families Tax Relief Act
Economic Mobility Act (EMA)
(WFTRA)
American Family Act (AFA)
H.R. 3300
S. 1138 /H.R. 3157
S. 690/H.R. 1560
Parameter
(Rep. Neal)
(Sen. Brown/Rep. Kildee)
(Sen. Bennet/Rep. DeLauro)
Maximum Credit Amount
$3,000 per child 0-3 years old
$3,000a per child 0-5 years old
$3,600a per child 0-5 years old
$2,000 per child 4-16 years old
$2,000a per child 6-16 years old
$3,000a per child 6-16 years oldb
Maximum Additional Child Tax
$3,000 per child 0-3 years old
$3,000a per child 0-5 years old
$3,600a per child 0-5 years old
Credit (ACTC)
$2,000 per child 4-16 years old
$2,000a per child 6-16 years old
$3,000a per child 6-16 years oldb

(i.e., al of the child credit can be received as
(i.e., al of the child credit can be received as
(i.e., al of the child credit can be received as
the ACTC.)
the ACTC.)
the ACTC.)
Refundability Formula for
No formula; credit is equal to fixed
No formula; credit is equal to fixed
No formula; credit is equal to fixed
ACTC
amount per child and is ful y refundable.
amount per child and is ful y refundable.
amount per child and is ful y refundable.
Hence, taxpayers with no income tax
Hence, taxpayers with no income tax
Hence, taxpayers with no income tax
liability and no earned income would
liability and no earned income would
liability and no earned income would
receive the maximum amount.
receive the maximum amount.
receive the maximum amount.
Phaseout Threshold
$400,000 married filing jointly
$200,000 married filing jointly
$180,000 married filing jointly
$200,000 head of household & single
$150,000 head of household & single
$130,000 head of household & single
$200,000 married filing separately
$100,000 married filing separately
$90,000 married filing separately
Same as current law

Phaseout Rate
Credit is reduced by $50 for every
Credit is reduced by $50 for every
Credit is reduced by “applicable amount”
$1,000 (or fraction thereof) above the
$1,000 (or fraction thereof) above the
for every $1,000 (or fraction thereof)
phaseout threshold.
phaseout threshold.
above the phaseout threshold.
Same as current law
Same as current law
Applicable amounta
=$150 if al children are 6 years or older
=$180 if al children are under 6 years
CRS-15

Working Families Tax Relief Act
Economic Mobility Act (EMA)
(WFTRA)
American Family Act (AFA)
H.R. 3300
S. 1138 /H.R. 3157
S. 690/H.R. 1560
Parameter
(Rep. Neal)
(Sen. Brown/Rep. Kildee)
(Sen. Bennet/Rep. DeLauro)
Qualifying Child ID
2019-2020: Social Security Number
2019-2025: Social Security Number
2020-: SSN or Individual taxpayer
Requirements
(SSN).
(SSN).
identification number (ITIN).
2026-: SSN or individual taxpayer
identification number (ITIN).
Same as current law
Same as current law
Payment Frequency
Annual
Monthly
Monthly
Same as current law
The legislation directs the Treasury
The legislation directs the Treasury
Secretary to make the credit advanceable
Secretary to make the credit advanceable
on a monthly basis, or “as the Secretary
on a monthly basis, or “as the Secretary
determines to be administratively
determines to be administratively
feasible.”
feasible.”
Payments to Residents of
Treasury is authorized to make payments
Same as current law
Treasury is authorized to make payments
Puerto Rico and Other
to al territories for the aggregate cost of
to al territories for the aggregate cost of
Territories
the child credit under this proposal (the
the child credit under this proposal (the
nonrefundable and refundable portion of
nonrefundable and refundable portion of
the child credit).
the child credit).
Unlike the rest of the bil , this would be a

permanent change.
Modifications to Other Tax
Yes, modifies earned income tax credit
Yes, modifies earned income tax credit
No, only modifies the child credit.
Benefits
(EITC), and child and dependent care tax
(EITC) and regulates paid preparers.
benefits.
Applicable Years
2019 and 2020
2019-
2020-
(Payment to territorial residents would
(Permanent change)
(Permanent change)
be permanent.)
Sources: CRS analysis of Internal Revenue Code (IRC) Section 24 and the Economic Mobility Act (EMA; H.R. 3300), the Working Families Tax Relief Act (WFTRA; S.
1138 and H.R. 3157), and the American Family Act (AFA; S. 690 and H.R. 1560).
a. Annual y adjusted for inflation.
b. H.R. 1560 would extend the eligibility age for this credit to include 17-year-olds (i.e., 6-17 years old).
CRS-16

Figure 5. Child Tax Credit Amount Under AFA, EMA, and WFTRA by Income

CRS-17

link to page 19
Sources: CRS Analysis of Internal Revenue Code (IRC) Section 24 and the Economic Mobility Act (EMA; H.R. 3300), the Working Families Tax Relief Act (WFTRA; S.
1138 and H.R. 3157) and the American Family Act (AFA; S. 690 and H.R. 1560).
Notes: Note that the changes made by these bil s would al be concurrently in effect in 2020 if these bil s were to be enacted. Stylized examples assume the taxpayer has
one qualifying child and al income is earned income, with no other sources of income and no above-the-line deductions. Unmarried refers to taxpayers who file as single
and head of household, married refers to married taxpayers who file their taxes jointly. The definition of “young child” and “older child” varies by bil . For the EMA, a
young child is under four years old; for the WFTRA and the AFA, a young child is under six years old. Older children would general y be those who were 16 years and
younger but not considered young children. However, H.R. 1560 would extend the eligibility age for this credit to include 17-year-olds (i.e., 6-17 years old). Where only
one line is visible because of overlap, credit amounts are the same; see Table 3 for details.

CRS-18

The Child Tax Credit: Selected Legislative Proposals in the 116th Congress

Author Information

Margot L. Crandall-Hollick

Acting Section Research Manager

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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