JD Vance Makes a Pitch for a $5,000 Child Tax Credit, Explained

The child tax credit is having a moment.

The credit and other tax ideas are bubbling up in the presidential campaign, highlighting that November’s winner will influence the tax code rewrite prompted by next year’s big tax battle. That’s when most of the 2017 tax law’s individual provisions expire, prompting Congress to act to avoid across-the-board tax increases.

The Democrats’ presidential convention starts in Chicago Aug. 19, where the issue also is likely to emerge.

Vice presidential hopeful Sen. JD Vance (R-Ohio) this week proposed more than doubling the child tax credit as he seeks to prove his pro-family bona fides to independent voters. Vance is on the back foot after taking some criticism for calling Democrats like Donald Trump’s rival Kamala Harris “childless cat ladies.”

Here’s what you need to know about the child tax credit as it plays out on the campaign trail.

1. Why is Vance proposing to expand the credit?

Vance floated the $5,000 credit as the parties battle for swing voters against Harris and her VP choice, Minnesota Gov. Tim Walz. Walz has overseen enacting progressive priorities such as an expanded child credit while leading his state.

“I would like to have a broad-based family policy and a broad-based child tax credit,” Vance said in an interview on CBS’ Face the Nation.

Offering few specifics, the populist-leaning Vance doubled down on earlier comments that families with children should face lower tax rates than childless families, citing breaks like the CTC as a way to bring them down.

Democrats criticized Vance for skipping an Aug. 1 Senate test vote on a $78 billion bipartisan tax bill that would expand the child tax credit and restore several Trump-era business breaks. That bipartisan bill passed the House with major GOP support, but Vance and Senate Republicans accused Democrats of playing politics by forcing the vote on the last day before a summer recess.

2. What’s the law now?

The credit has bipartisan roots, stemming from 1997 legislation signed by former Democratic President Bill Clinton when Republicans controlled both houses of Congress.

It’s been made more generous several times and in 2001 became refundable, meaning people with little income could still claim some of the credit. Parents or caregivers can reduce their total income tax bill by up to $2,000 per qualifying child.

Congress doubled the credit through 2025 from $1,000 in the 2017 GOP-led tax law. In general, the highest- and lowest-income earners don’t get the full benefit.

The minimum income threshold of $2,500 meant 18 million children under age 17—26% of all children—were ineligible, a Columbia University Center on Poverty and Social Policy analysis found.

That income threshold where the credit becomes partially refundable has been frequently called a work requirement by lawmakers.

3. What do Democrats want?

Vance, who hasn’t provided many details, appeared in the TV interview to propose raising the per-child credit amount and expanding eligibility.

“You want it to apply to all American families,” he said on CBS, also noting he didn’t think there should be a cutoff for lower- or higher-income families.

That doesn’t square with what many Senate Republicans say they’d be willing to support and tracks more closely with Democrats’ priorities. The party shepherded a temporary $3,600 boost to the credit for some children in a Democrat-led pandemic aid law. The legislation also delivered the credit to families in a monthly check and made it fully refundable.

Family advocates and Democrats celebrated the pandemic law, citing a US Census analysis that the credit was part the reason that the child poverty rate was cut nearly in half during the pandemic.

The deal forged early this year between Senate Finance Committee Chair Ron Wyden (D-Ore.) and House Ways and Means Committee Chair Jason Smith (R-Mo.) made the credit more generous and broadened eligibility by adjusting the $2,000 maximum credit for inflation through 2025.

It boosted the refundable portion of the credit to $1,800 for the 2023 tax year, before rising to $1,900 and $2,000 in tax years 2024 and 2025, respectively. Low earners also would be able to get more of the credit with less income.

Another provision allows families unable to clear the minimum income threshold to cite the prior year’s earnings to calculate their eligibility. But, it didn’t do away with the $2,500 income threshold.

4. Would Republicans support a $5,000 child tax credit?

It’s possible but seems unlikely any time soon, after the demise of the bipartisan Wyden-Smith effort and general GOP opposition to many of the credit’s current and proposed features.

Republicans have blasted certain elements as giveaways to the poor. Opposition to the credit in the Wyden-Smith bill led GOP leaders like Senate Finance ranking member Mike Crapo (R-Idaho) to mobilize their colleagues to sink that bipartisan bill.

Senate Republicans also picked at the bill’s provision that allowed taxpayers to cite to the previous year’s income, contending it could discourage Americans from working.

Those concerns from members of his party would likely resurface if Vance were to try and work with Congress to enact the $5,000 child credit.

Read More:

• Expanded Child Credit Would Cost $1.3T Over Decade, Says Joint Tax
• Tax Bill Defeat Reveals Split Between Senate, House Republicans
• What Is the Child Tax Credit, and Will It Go Up?
• Democrats Dare GOP to Vote Against Child, Business Tax Breaks
• Vance Backs $5,000 Child Tax Break in Bid to Steady Campaign
• VP Pick Tim Walz Enacted Progressive Tax Reforms in Minnesota