The Earned Income Tax Credit (EITC) was signed into law by President Gerald Ford on March 29, 1975, as a temporary measure to provide financial help to working families. It was later expanded by President Reagan in 1986 and has been strengthened by subsequent administrations. Other major tax credits, like the Child Tax Credit, were created later (1997).
The new Child Tax Credit is in addition to the Earned Income Tax Credit and the Child and Dependent Care Tax Credit (tax credits President Clinton protected during the balanced budget negotiations). President Clinton also expanded the Earned Income Tax Credit to give 15 million working families tax relief.
The EITC was enacted during the Ford administration by the Tax Reduction Act of 1975. Originally, the EITC was supposed to be a temporary refundable tax credit for lower-income workers to offset the Social Security payroll tax and rising food and energy prices. The credit was made permanent by the Revenue Act of 1978.
Newt Gingrich and his Congress passed the very first Child Tax Credit, which President Bill Clinton signed into law in 1997. Incremental improvements were made to the credit under presidents George W. Bush (2001), Barack Obama (2009) and Donald Trump (2017). In that tradition of bipartisanship, the House passed H.R.
A component of the Tax Reduction Act, EITC was signed into law by President Gerald Ford on March 29, 1975.
President Abraham Lincoln started the first U.S. income tax in 1861 to fund the Civil War, but it was temporary; the modern, permanent income tax system was established under President Woodrow Wilson with the ratification of the 16th Amendment in 1913, which gave Congress the power to levy income taxes without apportionment.
They overwhelmingly opposed Democrats' expansion of the credit that provided families with monthly checks to pay bills and cut childhood poverty in half. Faced with this life-changing data, they refused to help us extend the expanded benefit and allowed it to expire.
President Donald Trump signed his "big beautiful" spending bill into law on July 4. One provision is an increase to the maximum child tax credit, raising it from $2,000 per eligible child to $2,200 beginning in 2026.
The American Rescue Plan Act – which President Biden signed into law in 2021– included a revolutionary expansion of the existing Child Tax Credit (CTC).
Your child tax credit is likely $500 instead of $2,000 because they either turned 17 during the tax year, making them eligible for the Other Dependent Credit, or you might have mistakenly checked a box in your tax software, like saying their SSN isn't valid for employment or that they paid over half their own support, which triggers the lower credit amount, according to TurboTax support, TurboTax support, TurboTax support, and TurboTax support https://ttlc.intuit.index.php/community/taxes/discussion/my-daughter-is-17-but-is-still-jr-in-high-school-why-do-i-only-get-500-for-her-and-not-the-full-2000/00/3423950.
Enacted in 1997 and expanded multiple times with bipartisan support since 2001, the Child Tax Credit helps make the cost of raising children more affordable for families. The credit is worth up to $2,200 per eligible child (under age 17 at the end of the tax year) for 2025.
Originally proposed by President Barack Obama to help students and families pay for post-secondary education, the proposal called for a $4000 credit in exchange for 100 hours of community service.
1975: President Gerald Ford signed the Tax Reduction Act of 1975 into law. This enacted the EITC on a temporary basis. The maximum credit was $400.
North-West vs South-East divide in family benefits
In general, family benefits per person are highest in Northern and Western Europe, and lowest in the South and East. After Luxembourg, Nordic countries top the list: Norway (€2,277), Denmark (€1,878), Iceland (€1,874), Sweden (€1,449), and Finland (€1,440).
The Tax Cuts and Jobs Act of 2017 (TCJA), with efforts led by Sen. Marco Rubio (R-FL) and Ivanka Trump, made three major changes to the CTC: It doubled the amount per qualifying child to $2,000. It made up to $1,400 of the credit refundable.
The Joe Manchin failure, and the larger failure
There's a very simple answer to why the child credit didn't continue: there weren't 50 senators willing to support its extension. And most public reporting suggests the main holdout was Sen. Joe Manchin.
In 1987, Congress created a bipartisan National Commission on Children tasked with developing policies for the benefit of children and families. Its final report included many policy ideas, including what would eventually become the Child Tax Credit.
The American Rescue Plan increased the child tax credit (CTC) for 2021.
The bottom 99% also saw an average federal tax rate increase by one percentage point from 2012 to 2013, mainly due to the expiration of the Obama payroll tax cuts, which were in place in 2011 and 2012. However, for income groups in the bottom 99%, the average federal tax rate remained at or below the 2007 level.
"We passed the largest tax cuts in American history, including no tax on tips, no tax on overtime, no tax on Social Security for our great seniors," Trump said in a speech at the World Economic Forum in Davos, Switzerland, on Wednesday.
The Congressional Budget Office (CBO) estimated in 2018 that the 2017 law would cost $1.9 trillion over ten years, and recent estimates show that making the law's temporary individual income and estate tax cuts permanent would cost roughly another $4.2 trillion through 2035.
The Child Tax Credit was created in 1997, providing $400 per child in 1998 (about $725 in 2023 dollars) and $500 per child (about $875 in 2023 dollars) in the immediate years after that. Under Presidents Bush, Obama, and Trump, the Child Tax Credit gradually increased to $2,000 per child.
Senate Democrats Just Voted Against Lower Taxes, Higher Pay, National Security, and More. The One Big Beautiful Bill just PASSED the U.S. Senate, moving the landmark legislation one step closer to President Donald J. Trump's desk — and once again, it was done without the support of a single Democrat.
Although these changes were scheduled to expire at the end of 2025, the FY2025 reconciliation law (P.L. 119-21) made them permanent. That law also permanently increased the maximum child tax credit from $2,000 per child to $2,200 per child, while indexing it to inflation.