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Many Veterans Wouldn’t Fully Benefit from Senate Tax Bill’s Child Tax Credit Increase

November 27, 2017 at 3:15 PM

The Senate tax bill increases the Child Tax Credit (CTC) from $1,000 to $2,000 per child, but many working families – including many with parents who are veterans – wouldn't get the full increase because their incomes are too low. In fact, many veterans would receive only a token increase of $75 or less.

Nationally, 10 million children under age 17 in working families would get no more than $75 while another 16 million would get less than the full $1,000-per-child increase that higher-income families (including those earning up to $500,000) could receive.

As for veterans:

  • An estimated 500,000 veterans who are parents in working families wouldn't receive the full increase. These parents have 1 million children under age 17.
  • More than 140,000 of these 500,000 veteran parents, with about 260,000 children under age 17, would receive only a token increase of $75 or less.

While the veterans in this group are diverse, they tend to be young – their median age is 37 – and about 60 percent of them served in the military since September 2001. Their earnings are modest but reflect substantial work. Their families' median adjusted gross income is $28,000, and about three-quarters have incomes below $40,000.

This group is also geographically diverse. As Table 1 shows, in each of 21 states, more than 10,000 veteran parents in working families wouldn't benefit from the full CTC increase because their incomes are too low.

Veterans are an important example of the millions of hard-working parents whom the Senate's CTC expansion would partially leave out because of its design. As we've explained, the proposal would raise the CTC substantially for those who owe enough in federal income taxes to benefit. But it does little to improve the "refundable" part of the credit, which is available as a refund to working families who don't earn enough to owe substantial federal income taxes.

As a result, a single mother veteran with two children who earns $18,000 would only gain $200 in 2018 from the CTC proposal. Meanwhile, a married couple with two children earning $500,000 would qualify for the CTC for the first time and get a $4,000 credit. Under current law, such a family can't qualify for the credit if its income exceeds $150,000.

TABLE 1
Estimated Veteran Parents in Working Families That Would Not Receive Senate Bill’s Full $2,000-per-Child Child Tax Credit Due to Low Income*
U.S. Total 500,000  
     
Alabama 9,500  
Alaska 1,900  
Arizona 14,200  
Arkansas 9,300  
California 36,700  
Colorado 10,600  
Connecticut 2,000  
Delaware (a)  
District of Columbia (a)  
Florida 37,600  
Georgia 26,200  
Hawaii 3,300  
Idaho 3,900  
Illinois 15,100  
Indiana 11,500  
Iowa 5,700  
Kansas 6,500  
Kentucky 11,000  
Louisiana 11,000  
Maine 3,300  
Maryland 7,400  
Massachusetts 4,000  
Michigan 16,200  
Minnesota 7,000  
Mississippi 7,100  
Missouri 13,000  
Montana 2,400  
Nebraska 3,400  
Nevada 6,300  
New Hampshire 2,300  
New Jersey 4,700  
New Mexico 4,700  
New York 15,300  
North Carolina 24,800  
North Dakota (a)  
Ohio 20,700  
Oklahoma 10,900  
Oregon 7,000  
Pennsylvania 17,300  
Rhode Island (a)  
South Carolina 11,900  
South Dakota 2,200  
Tennessee 16,100  
Texas 53,400  
Utah 4,800  
Vermont (a)  
Virginia 18,200  
Washington 14,900  
West Virginia 3,600  
Wisconsin 8,800  
Wyoming (a)  
     
* The Senate provision extends the CTC to children aged 17; under current law the credit is only available to children aged 16 or younger.  These figures reflect the impact on parents with children under 17. (a) Sample size is too small for a reliable estimate.
     

Source: CBPP analysis of American Community Survey public use data for 2013-2015.