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Bipartisan Child Tax Credit Expansion Would Help Roughly Half a Million Children in Veteran and Active-Duty Families in First Year

The bipartisan tax package passed by the House Ways and Means Committee earlier this month would expand the Child Tax Credit for most of the estimated 19 million children who currently receive a partial credit or no credit at all because their families’ incomes are too low. Among the roughly 16 million children in families with low incomes who would benefit from the expansion in the first year, about half a million are in the families of U.S. veterans and active-duty service members. Congress should seize this opportunity to support these families, whose budgets are stretched too thin.

As we explained in a previous report, the bipartisan proposal would make three structural improvements to the Child Tax Credit with well-targeted benefits for children in low-income families:

  • Moving to a “per-child” phase-in to ensure low-income families receive the same credit for each of their children, as higher-income families already do;
  • Raising and then effectively ending in tax year 2025 the lower maximum credit amount (known as the “refundability cap”) that only limits the credit for families with low incomes; and
  • Allowing families to use their earnings from either the current tax year or the prior year when calculating the Child Tax Credit to help protect them from a drop in their credit if their earnings temporarily declined. (This change would take effect starting in tax year 2024.)

To see how the expansion could benefit a veteran or active-duty family with low earnings, consider the following example. A veteran, whose spouse stays home to take care of their three young children, earns $30,000 as a security guard. The bipartisan proposal would increase their credit by $1,275 in the first year — a meaningful income boost to help this family make ends meet.

Providing additional income to families with low earnings helps children thrive — improving their health, educational, and long-term economic outcomes. This bipartisan Child Tax Credit expansion would make a difference in the lives of roughly half a million children in veteran and active-duty families, along with millions more children in other families with low incomes, our analyses of IRS and Census data show. Congress should move quickly to approve it.