Bipartisan Hope: The Child Tax Credit in 2025

As the 2025 tax debate heats up, one subject stands out as a beacon of bipartisan agreement: the child tax credit. With child poverty rates still high and families struggling to make ends meet, lawmakers on both sides of the aisle are eager to find common ground on this crucial issue. Let's dive into the potential changes and their impact on child poverty and family finances.



The child tax credit has been a hot topic in recent years, with the 2021 expansion significantly reducing child poverty. As the temporary expansion sunsets, lawmakers are looking to make permanent changes that will continue to support families. Some of the most likely aspects to gain bipartisan support include:

1. Indexing the credit to inflation: This change would help maintain the value of the credit over time, ensuring that it continues to provide meaningful support to families. Both Democrats and Republicans have shown support for indexing the credit to inflation, with Sen. Chuck Grassley, a Republican, being a notable advocate.
2. Making the credit fully refundable: While Republicans have historically opposed fully refundable credits, the success of the 2021 expansion and the potential for a bipartisan deal may lead to support for this change. Making the credit fully refundable would allow more low-income families to claim the full amount, potentially lifting hundreds of thousands of children out of poverty.
3. Expanding the credit for low-income families: Both parties have shown interest in expanding the credit for low-income families. The Tax Relief for American Families and Workers Act of 2024, a bipartisan proposal, aims to increase the maximum refundable credit for low-income households, which could help alleviate some of the financial strain on these families.



These changes, if enacted, could have a substantial impact on child poverty rates and family finances. According to the Center on Budget and Policy Priorities, making the child tax credit fully refundable could lift at least half a million children out of poverty and improve the financial situation of about 5 million more children who would remain below the poverty line once the proposal is fully in effect in 2025.

In conclusion, the child tax credit is poised to be a key focus of the 2025 tax debate, with bipartisan support for changes that could significantly impact child poverty rates and family finances. As lawmakers work to find common ground, investors should keep an eye on these developments, as they could have far-reaching implications for the economy and the financial markets.