HR 1425119th CongressIn Committee

To amend the Internal Revenue Code of 1986 to increase the amount of the child tax credit, to make such credit fully refundable, to remove income limitations from such credit, and for other purposes.

Introduced: Feb 18, 2025

Standard Summary

Comprehensive overview in 1-2 paragraphs

H.R. 1425 would dramatically expand the federal child tax credit (CTC). It would raise the credit from the current level (the bill references increasing to 5,000) to $5,000 per qualifying child, and it would remove all income-based limitations, making the credit available to higher-income households as well. The bill also makes the credit fully refundable, meaning families would receive the full $5,000 per child as a refund even if they owe no federal income tax. In addition, it removes “deadwood” provisions and the existing special rules for residents of Puerto Rico and American Samoa, moving toward a single, uniform framework. The changes apply to taxable years beginning after December 31, 2024 (i.e., 2025 and later).

Key Points

1Increase the child tax credit amount to $5,000 per qualifying child.
2Remove income limitations, eliminating the phase-in/phase-out that currently reduces the credit at higher income levels.
3Make the credit fully refundable, so families receive the entire $5,000 per qualifying child as a refund even if they have little or no tax liability.
4Eliminate certain “deadwood” provisions and the existing special tax rules for Puerto Rico and related territories; replace with uniform rules and, if no approved plan exists, apply rules to American Samoa similarly.
5Effective for taxable years beginning after December 31, 2024.

Impact Areas

Primary group/area affected: U.S. families with qualifying children, including many low-, middle-, and high-income households, due to a much larger, fully refundable $5,000-per-child credit with no income cap.Secondary group/area affected: Residents of U.S. territories (Puerto Rico, American Samoa) whose existing special tax treatment for the CTC would be replaced with uniform rules; this could change eligibility and benefit amounts for those populations.Additional impacts: Significant potential increase in federal outlays due to a much larger, fully refundable credit; possible changes in labor supply incentives and poverty reduction effects; administrative and implementation considerations as the Internal Revenue Service adapts to a uniform, higher, fully refundable credit.

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