New Child Tax Credit Proposal Threatens to Exclude Millions of Immigrant Families

This story was originally reported by The 19th.

In a recent proposal from the Republican tax-writing committee, the child tax credit is set to increase to $2,500 per eligible child. However, provisions in the bill would deny access to millions of families, particularly targeting the nation’s poorest households and those with mixed immigration statuses.

A key stipulation requires at least one parent to have a Social Security Number, effectively excluding undocumented immigrants and some mixed-status families, even if their children possess Social Security Numbers. Estimates suggest this change could affect approximately 4.5 million children. Ashley Burnside, a senior policy analyst at the Center for Law and Social Policy, warns these restrictions may escalate financial pressures on struggling families.

“We’ll see more people having to make impossible decisions,” Burnside stated. “As more families are arbitrarily restricted from accessing these critical health benefits, it’s going to result in a lot of hardship.”

Currently, many filers without Social Security Numbers use Individual Taxpayer Identification Numbers (ITINs) for tax purposes. This new bill would strip those filers of any tax credits, reflecting a broader trend to limit access to public assistance for immigrant families. Kat Menefee of the National Women’s Law Center noted, “The fact that they’re not able to benefit from any of these benefits intended for families undermines the idea that this is a pro-family, pro-worker provision.”

Additional data shows that 17 million of the country’s lowest-income households will remain ineligible for the full credit under the proposed changes, primarily due to low earnings or lack of Social Security Numbers, reversing progress made since 2017 when eligibility was more inclusive.

Rep. Linda Sánchez, a California Democrat, criticized the proposal, asserting, “This bill doubles down on that assault on those seeking the American Dream.” She highlighted the elimination of the Direct File program, which allowed for free tax filing through the IRS, as a significant loss.

The current House tax proposal faces potential revisions, especially given opposition from fellow Republicans. Nonetheless, the exclusion of many immigrant and mixed-status households appears to be a sticking point, aligning with broader fiscal strategies previously outlined by President Donald Trump.

Historically, over 46 million taxpayers claim the child tax credit annually. Under the Biden administration, the tax credit temporarily increased to $3,600, effectively lifting millions out of poverty. However, the credit reverted to $2,000 in 2022, coinciding with a rise in child poverty.

Amidst bipartisan support, previous attempts to expand the child tax credit faced setbacks last year after Republican senators and former Democrat Senator Joe Manchin rejected a modest increase in the credit. Experts believe recent changes signal a deliberate shift in priorities since Republicans regained control.

Greenstein from the Brookings Institution noted, “It’s curious — the reconciliation bill as a whole really slams the working family, working paycheck-to-paycheck.” He emphasized that such families, once key to Trump’s voter base, are now facing increased economic strain.

On the Senate front, while there are discussions from some Republicans about potentially improving the child tax credit, Democrats, led by Senator Michael Bennet, have proposed a tiered credit system. However, the likelihood of such proposals advancing in the current fiscal environment remains slim.

As lawmakers continue negotiations, a decision is crucial; failure to reach an agreement will see the credit revert to a $1,000 baseline in the upcoming fall season.