Millions of U.S. kids could lose the Child Tax Credit under GOP budget bill, experts say

A Republican-backed budget package includes a new restriction for the federal Child Tax Credit that could strip the benefit from millions of children who are U.S. citizens or legal residents, according to policy experts. 

The proposed tax and spending legislation — which proponents have dubbed the “one big, beautiful bill” — includes a requirement that both a tax filer and the person’s spouse have Social Security numbers to claim the Child Tax Credit, or CTC, for their kids. That means children with mixed-status parents, such as one parent who is a U.S. citizen and the second who is not, would no longer qualify for the tax credit, said Carl Davis, the research director of nonpartisan tax research group ITEP.

Children who are born in the U.S., making them American citizens, but whose parents are undocumented would also be barred from the CTC. In some cases, one or both parents of a child who is authorized to be in the U.S. may lack a Social Security numbers. For example, parents who are in the U.S. on non-working visas, such as graduate students on education visas, would be prohibited from receiving the tax credit. 

The proposed restriction is part of a push by Republican lawmakers to ensure that tax breaks aren’t going to undocumented immigrants. But the new policies would have the secondary effect of denying a tax credit to millions of children in the U.S. who currently qualify for the benefit, policy experts told CBS MoneyWatch. 

The CTC, which now amounts to $2,000 per eligible child and has been shown to lift children out of poverty, currently requires that each kid has a valid Social Security number, but not their parents. 

Republicans say the bill would benefit families by boosting the CTC to $2,500 for three years, and then adjusting the tax credit each year for inflation so its value doesn’t erode over time.

A spokesperson for the Republican members of the congressional panel didn’t immediately respond to a request for comment. 

In May, “Working families, farmers and small businesses win with this bill,” House Ways and Means Committee Chairman Jason Smith, a Republican from Missouri, said last month from the House floor. “We expand and make permanent the small business deduction, and increase the Child Tax Credit, the standard deduction and the Death Tax exemption.”

He added, “President Trump stopped the flow of illegal immigrants over our borders — this bill will stop the flow of taxpayer benefits to their pockets.”

4.5 million kids could be affected

Most undocumented immigrants are already blocked from receiving most federal tax benefits, according to the Brookings Institution. The GOP tax bill could instead eliminate tax breaks for many immigrants who are in the U.S. legally, such as refugees or people on educational visas, the think tank said in a recent report. 

The tax bill could undergo more changes as it moves through the legislative process. The Senate is currently working on the measure after it squeaked through the House with a one-vote margin. Some senators have voiced opposition, such as Sen. Rand Paul of Kentucky, who has said the bill will “explode the debt.”

Should the CTC restriction be passed into law, however, it would impact roughly 4.5 million children, with the greatest number residing in California, Texas and Florida, according to an April estimate from researchers at the Center for Migration Studies, Center on Poverty and Social Policy at Columbia University, ITEP and Boston University. 

“The proposal now is actually to tighten the eligibility rules even more and to say, ‘We basically don’t care if the child is a citizen or not — we need every person in the household to be a citizen or otherwise have legal status in order for the credit to be paid out,” Davis said. 

“Treated differently”

Under the GOP bill, both spouses in a given household also must have a Social Security number to qualify for a number of other tax breaks, including provisions eliminating taxes on worker tips and overtime pay. 

That would create different tax rules for people who are married to spouses without a Social Security number, as well as for immigrants who are undocumented or who possess valid visas that don’t allow them to have Social Security numbers, ITEP’s Davis said. 

“It seems to say, if your parents don’t meet this criteria regarding their immigration status, then you will be treated differently as a child than all other children in the U.S. who were born of two parents that meet the qualifications,” said Shelby Gonzales, vice president for immigration policy at the Center on Budget and Policy Priorities, nonpartisan think tank.  

Created in 1997, the Child Tax Credit received a boost in President Trump’s 2017 Tax Cuts and Jobs Act, which doubled the credit to $2,000 per eligible child, although that provision is set to expire at the end of 2025, when the credit is set to return to $1,000 per kid. 

The Republican tax bill would boost the CTC to $2,500 per child from tax years 2025 through 2028, at which point the credit would return to its $2,000 level. The tax credit would also be adjusted for inflation each year, ensuring that it wouldn’t erode in value over time. 

Eligible parents can claim the CTC when filing their taxes, which can help families reduce their tax liability or receive a tax refund. During the pandemic, the CTC received a temporary boost that increased the maximum credit per child to $3,600 while paying out half the benefit through monthly payments, helping millions of families afford things like school supplies, clothing and educational programs for their kids.

An effort last year to expand the CTC failed to advance in the Senate in the face of widespread Republican opposition.

“When families have counted on this funding, it means making sure they have the school supplies, they have access to food and groceries,” Gonzales said. “That sets them up for a better trajectory in life, and all of that could be lost because they can’t access this credit.”