The figures come from the Center on Budget and Policy Priorities (CBPP), which examined the impact of the Child Tax Credit rules following the Republican reconciliation law enacted in 2025. While that legislation raised the maximum credit from $2,000 to $2,200 per child, it left unchanged the rules that limit how much many lower-income families can receive as a refundable credit.
The Child Tax Credit is intended to help families offset the costs of raising children under 17. Yet the way the credit phases in means that eligibility for the full amount depends not only on the number of children in a household but also on how much a family earns.
Current Rules Leave Many Working Families with a Reduced Credit
According to the CBPP, the refundable portion of the Child Tax Credit is capped at $1,700 per child for 2026, creating a $500 gap between what many lower-income households can receive and the full $2,200 credit available to families with higher earnings.
Under the current formula, families receive no Child Tax Credit on their first $2,500 of earnings. Beyond that threshold, the refundable credit increases by 15 cents for every additional dollar earned. The phase-in generally applies at the family level rather than separately for each child, meaning larger families may receive only the same total credit as a one-child household with similar earnings, or only a slightly higher amount.
The analysis provides several examples of how the rules work in practice. A single parent with two children must earn at least $34,150 in 2026 to qualify for the full $4,400 credit. According to the CBPP, that is equivalent to earning about $16.42 an hour while working 40 hours every week of the year without unpaid leave. A married couple with two children must earn at least $42,200 to receive the full benefit.
A single parent earning $16,000 while raising a three-year-old and a seven-year-old would receive a total Child Tax Credit of $2,025 under the current rules, less than half of the $4,400 available for two eligible children. The organization noted that the 2025 law did not increase that family’s credit compared with the previous rules, even though it increased the maximum benefit for families able to claim the full amount.
The Impact Varies Widely by State and Demographic Group
The largest numbers of affected children are concentrated in the nation’s most populous states. According to Newsweek, citing the CBPP analysis, California has an estimated 2.212 million children receiving less than the full credit, narrowly ahead of Texas with 2.193 million.
New York follows with approximately 1.183 million affected children, while Florida has an estimated 1.171 million. Ohio has about 749,000 children receiving less than the full credit, followed by Georgia with 737,000 and Pennsylvania with 705,000.
The analysis also identifies significant differences across racial and ethnic groups. More than half of Black children receive less than the full Child Tax Credit, while more than one in three Latino children and more than one in three American Indian and Alaska Native children are similarly affected.
Millions of children from other backgrounds also receive a reduced benefit because of their families’ earnings. Roughly one in five white children and more than one in six Asian children receive less than the full credit.
The overwhelming majority of affected children live in working families. Their parents include childcare workers, teaching assistants, nursing assistants, home health aides, cashiers and construction workers. It also estimates that 776,000 affected children have parents who are veterans.
Children living outside metropolitan areas are more likely to receive a reduced credit than those living in urban areas. More than one in three rural children under 17 receive less than the full $2,200 credit, compared with more than one in four children in metropolitan areas.
According to the CBPP, the difference is largely explained by lower earnings in rural communities, where median pay in 2024 was approximately 18 percent below the level in metropolitan areas. Among rural children receiving a reduced credit, about 56 percent are white, 16 percent are Latino, 15 percent are Black and 8 percent are American Indian or Alaska Native.
Lawmakers Continue to Debate Changes to the Credit
The Center on Budget and Policy Priorities is urging Congress to make the Child Tax Credit fully refundable so that lower-income families could receive the full $2,200 per eligible child regardless of their federal tax liability.
Congress temporarily adopted that approach through the American Rescue Plan Act for the 2021 tax year. That legislation also increased the maximum credit to $3,600 for children under six and $3,000 for children between the ages of six and 17. Together with other pandemic assistance, the expanded credit helped reduce child poverty to a record low in 2021.
Other proposals would modify the existing phase-in rules rather than introduce full refundability. One bipartisan bill introduced in 2024 by Representative Jason Smith and Senator Ron Wyden would calculate the 15 percent phase-in separately for each child while increasing, and eventually eliminating, the lower refundable-credit limit.
The measure passed the House with the support of 169 Republicans but was blocked by Senate Republicans. According to the CBPP, it would have expanded the Child Tax Credit for more than 80 percent of children currently missing the full benefit during its first year. Under that proposal, the single parent earning $16,000 with two children would have received $4,050 instead of $2,025.
Another bipartisan proposal, introduced by Senators Todd Young and Maggie Hassan, would allow the Child Tax Credit to begin phasing in from a family’s first dollar of earnings by eliminating the existing $2,500 threshold. The bill is currently awaiting review by the Senate Finance Committee.
