The Child Tax Credit (CTC) boost in the One Big Beautiful Bill Act (OBBBA) leaves millions of families behind while disproportionately helping higher-income households rather than those most in need. There are better alternatives.
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Last year, lawmakers slightly increased the Child Tax Credit as part of the so-called “One Big Beautiful Bill Act.” But the change does little to help the children who most need support, according to a new ITEP report released today that includes national and state-by-state data.
The CTC still needs bold reform to strengthen the economic security of low- and moderate-income families across the country. One proposal, the American Family Act, would reinstate and expand the 2021 enhanced Child Tax Credit and would deliver far better results for families, as the report explains.
“Under the 2025 tax law, the Child Tax Credit went up a little, but for many families the Trump administration’s tariffs raised prices even more,” said ITEP Senior Analyst and report author Joe Hughes. “And millions of children most in need of support are still left out of the full credit.”
Key Findings
Who can and cannot receive the full CTC?
Under OBBBA, many children will be barred from receiving the full credit in 2026, including:
- 30 percent of all children in the U.S.
- Virtually all (99 percent) of children in the poorest fifth of families, who are most in need of help
- About 40 to 50 percent of children in Black, Hispanic, and Native American families
- About 22 percent of children in white families
- A higher share of families with young children
Under the American Family Act, no children would be denied the full CTC because their families earn too little.
How are the benefits distributed across the income spectrum?
Under OBBBA’s modest CTC increase, larger benefits go to families with higher incomes while families with lower incomes receive little or nothing. The American Family Act would produce the opposite result.
- The largest share of benefits from OBBBA’s CTC provision (41 percent) goes to the richest fifth of Americans, with the share declining across income groups until it drops to virtually zero for the poorest fifth.
- The American Family Act would reverse this pattern, directing the largest shares of benefits to low- and middle-income children.
- President Trump’s tariff policies are estimated to have raised the cost of baby products for the typical family by $400 in the first half of 2025. Yet OBBBA’s average benefit is $0 for families with children in the poorest fifth and $240 for families in the middle fifth.
- Under the American Family Act, the average benefit would be $4,900 for families with children in the poorest fifth and $2,780 for those in the middle fifth.
Background: What OBBBA did—and didn’t do—on the CTC
OBBBA increases the maximum Child Tax Credit from $2,000 (the level that would apply if Congress had simply extended the tax rules in effect in 2025) to $2,200, but it leaves in place restrictions based on earnings and other income.
Notably, the $2,200 credit is lower than it would be if Congress had simply adjusted the $2,000 credit created in the 2017 tax law for inflation.
While a small number of children are ineligible for the full credit because their families earn too much, far more children are ineligible because their families earn too little. This is because the portion of the CTC that benefits many low- and middle-income families—the refundable credit—remains subject to restrictions that OBBBA left in place but that the American Family Act would eliminate.
