What the One Big Beautiful Bill Means for the Child Tax Credit

A New Chapter in Federal Support for Families
|
Tax Policy
Woman calculating taxes with child in the background.

On Friday, July 4, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law, ushering in a sweeping set of tax and fiscal changes with long-term implications for the federal budget, families, and state policy alike.

One of the most closely watched provisions for us at Aligned was the future of the Child Tax Credit (CTC). The 2017 Tax Cuts and Jobs Act temporarily increased the credit from $1,000 to $2,000 per child, but that expansion was set to expire at the end of 2025 without Congressional action.

OBBBA Expands and Adjusts the CTC

The final law adopts the Senate version of the CTC expansion, delivering several key changes.

  • Increased Credit Amount: Starting in 2025, the CTC rises to $2,200 per child, with future increases tied to inflation.
  • Refundable Portion Adjusted: The maximum refundable portion is set at $1,400, also indexed to inflation—an important change for lower-income families.
  • Income Thresholds Maintained: The credit continues to phase down for incomes above $200,000 (single filers) and $400,000 (married joint filers).

Key Considerations

According to the Committee for a Responsible Federal Budget, the expanded CTC will reduce federal revenues by $797 billion from FY 2025 through FY 2034, contributing significantly to the projected increase in the federal deficit from the broader tax package.

While the expanded credit delivers more support to many families, concerns remain around equity and access. The Tax Policy Center estimates that 17 million children —roughly one in four under age 17 — will receive less than the full credit because their families earn too little to qualify for the full benefit. The new law doesn’t worsen this issue, but it also doesn’t fix it, leaving out the same low-income families who have long received only a partial credit under previous rules.

Looking Ahead

Despite ongoing debates over cost and accessibility, the expansion of the CTC to $2,200 per child represents a continuation of a broader federal commitment to supporting families. This expansion underscores a broadening bipartisan agreement that the Child Tax Credit plays a critical role in supporting families and promoting economic stability.

Research has consistently shown that refundable tax credits of this size can reduce child poverty, improve health and education outcomes, and increase long-term earnings for children. 

For working parents across the country — and especially in Kansas and Missouri — this credit offers meaningful support at a time when affordability remains top of mind. As always, the challenge will be ensuring that the policy reaches those who need it most.