New Child Tax Credit Brings Significant Changes, Raising Inequality Concerns

Strategic Insights -

A new child tax credit is coming into effect next year, altering how much assistance families receive and which families can receive it. The changes were made permanent by President Donald Trump's tax and spending package, which brings significant benefits but also new restrictions that will affect immigrants and low-income families.

Key Takeaways:

  • The total amount of the child tax credit will increase from $2,000 to $2,200, and will be indexed to inflation.
  • Children and at least one of their parents or guardians will have to have a Social Security number to qualify for the credit, affecting an estimated 2.7 million American kids who likely qualify this year.
  • The tax credit will phase in depending on income, and families have to earn more before they can claim the full amount, affecting 19 million children who will not receive the full amount.
  • The share of children from marginalized backgrounds who are not going to be able to receive the full amount has increased, with 48% of American Indian or Alaska Native children, 45% of Black children, and 39% of Latinx children now blocked from receiving the full amount.
  • The Supplemental Nutrition Assistance Program will lose $186 billion in funding through 2034, affecting eligibility for free school meals and for families that rely on the assistance to put food on the table.
  • $1 trillion will be cut from Medicaid and the Children's Health Insurance Program in the next decade.
  • The new child tax credit will only be available to families with a Social Security number, excluding single parents or guardians who don't have a Social Security number, even if the child does have a Social Security number.
  • The states with the largest share of children who don't qualify for the full amount are Mississippi (40.6%), Louisiana (38.2%), New Mexico (38.2%), Alabama (35.1%), and Kentucky (34.9%).

Statistics:

  • Estimated 2.7 million American kids who likely qualify for the credit this year will no longer be able to get it as of next year.
  • 19 million children are now blocked from receiving the full amount of the credit, compared to 17 million currently.
  • 48% of American Indian or Alaska Native children will not be able to receive the full amount of the credit.
  • 45% of Black children will not be able to receive the full amount of the credit.
  • 39% of Latinx children will not be able to receive the full amount of the credit.
  • 60% of children of single mothers will not be able to receive the full amount of the credit.
  • 35% of children in rural parts of the country will not be able to receive the full amount of the credit.
  • Estimated 28% of children will not qualify for the full amount because their parents earn too little.
  • 4% of children will not qualify for the full amount because their parents earn too much.
  • $186 billion will be cut from the Supplemental Nutrition Assistance Program through 2034.
  • $1 trillion will be cut from Medicaid and the Children's Health Insurance Program in the next decade.

Sources:

  • The 19th News: "Child tax credit qualifications change"
  • Brookings Institute: "What will deportations mean for the child welfare system?"
  • The 19th News: "Child tax credit future"
  • The 19th News: "Child tax credit 2024 senate votes against bill"
  • The Center on Poverty and Social Policy at Columbia University: "Research and analysis on the child tax credit"
  • The 19th News: "Trump big beautiful tax bill impact on Medicaid SNAP"
  • The 19th News: "Trump big beautiful tax law numbers"