The Child Tax Credit: Legislative History (CRS Report for Congress)
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| Release Date |
Revised Dec. 23, 2021 |
| Report Number |
R45124 |
| Report Type |
Report |
| Authors |
Margot L. Crandall - Hollick |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
The child tax credit was initially
structured
in the Taxpayer Relief Act of 1997 (
P.L. 105
-
34
)
as a
$500
-
per
-
child nonrefundable credit
to provide tax relief to middle
-
and upper
-
middle
-
income
families. Since 1997, various laws have modified key parameters of the credit, expanding the
availability of the benefit to
more low
-
income families while also increasing the value
of the tax
credit
. The first significant change to the child tax cre
dit occurred
with the enactment of
the
Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA;
P.L. 107
-
16
). EGTRRA
increased the amount of the credit over time t
o $1,000 per child and made it partially refundable
under the earned income formula. The refundable portion of the credit
—
the amount that exceed
s
income tax liability
—
is often referred to as the additional child tax credit or ACTC.
Subsequent legislation
enacted in 2003 and 2004 accelerated the implementation of the changes
made under EGTRRA. In 2008 and 2009, Congress passed legislation
—
the Emergency
Economic Stabilization Act of 2008 (EESA;
P.L. 110
-
343
) and the American Recovery and
Reinvestment Act of 2009 (ARRA;
P.L. 111
-
5
)
—
that further expanded the availability and
amount of the credit to
taxpayers whose income was too low to either qualify for the credit or be
eligible for the full credit. ARRA lowered the refundability threshold to its current level of $3,000
for 2009 through 2010. The ARRA provisions were subsequently extended several t
imes and
made permanent by the Protecting Americans from Tax Hikes (PATH) Act
of 2015
(Division Q of
P.L. 114
-
113
).
At the end of 2017, Congress enacted
P.L. 115
-
97
which, in addition to making numerous
changes to the tax code, temporarily changed the child tax credit. Specifically, the law increased
the credit for many (though not all) taxpay
ers by doubling the maximum amount of the credit
(and increasing the maximum amount of the ACTC to $1,400), increasing the income at which
the credit begins to phase out, and reducing the refundability threshold. In addition, this law
temporarily modified
the identification (ID) number requirement of the credit, requiring taxpayers
to provide the Social Security number (SSN) for every child for whom they claimed the credit.
P.L
. 115
-
97
also created a new temporary “family credit” for non
-
child credit eligible dependents
(children ineligible for the child tax credit or older non
-
child dependents). Non
-
child credit
eligible dependents excludes otherwise eligible dependents who a
re citizens of Mexico or
Canada. The credit is equal to $500 per non
-
child credit eligible dependent. The amount is not
an
nually adjusted for inflation.
The phaseout parameters of the child credit (
i
.
e.,
phaseout
thresholds of $400,000 married filing jointly, $200,000 other taxpayers, 5% phaseout rate) apply
to the family credit. The family credit is not annually adjusted for inflation.
All the modifications to the child tax credit and the new family cred
it are currently scheduled to
expire at the end of 2025
