Glossary

Child tax credit

A federal tax credit that reduces what families owe for each qualifying child, partly refundable for some low-income parents.

Also called: CTC, per-child tax credit

The child tax credit (CTC) is a federal income tax benefit that reduces the tax of families with qualifying children under age 17. It was created in 1997 at $400 per child, and later raised: the 2017 tax law doubled it to $2,000, and legislation in 2025 increased it again. Part of the credit is refundable, meaning that families with low tax liability may receive a portion as a refund, subject to earnings requirements.

The credit phases out at higher incomes. In 2021, pandemic relief temporarily expanded it to up to $3,600 for young children, made it fully refundable and paid it monthly, a change that cut measured child poverty but expired after one year. Debate followed over whether to restore it.

Many conservatives support a child credit as pro-family policy that recognizes the cost of raising children and supports work, and some favor limiting refundability to families with earnings, concerned about work incentives. Many progressives favor an unconditional, fully refundable credit to reduce poverty, like a universal basic income for children. Studies disagree about the effects of the 2021 expansion on parental employment. It is similar to the earned income tax credit in policy design.

Last reviewed November 8, 2026

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Related terms

Earned income tax credit A refundable federal tax credit that supplements the earnings of low- and moderate-income workers, particularly those with children. Tax expenditure A provision of the tax code, such as a deduction or credit, that reduces tax owed to encourage a behavior, functioning like government spending. Progressive tax A tax whose rate rises as the taxpayer's income or wealth rises, so higher earners pay a larger share. Payroll tax A tax on wages that funds Social Security and Medicare, split between employers and employees. Universal basic income A proposal for regular cash payments to all citizens or residents, regardless of income or work status.