Child Tax Credit
The Child Tax Credit (CTC) is a federal tax credit that reduces tax burdens on families with children ages 16 and younger, returning money to their pockets based on a household’s income tax level. It does not help families who do not pay income taxes or who pay less in taxes than the credit amount ($2,200), but those families may still be eligible for the “Additional Child Tax Credit,” which provides a cash refund even when a family is paying very low or no federal taxes (as long as they meet income minimums).1
As of tax year 2025, the federal Child Tax Credit allows families to receive a refund of up to $2,200 per qualifying child and the Additional Child Tax Credit provides up to $1,700 per qualifying child, ages 0-16. However, benefits reduce incrementally as family income increases, relative to the number of qualifying children in each household; CTC rebates begin to decrease for single filers with incomes above $200,000 and for joint filers with incomes above $400,000. In recent years, Congressional Democrats have introduced multiple bills to significantly expand this federal tax credit – inspired by the successful reduction in child poverty rates that resulted from the enhancements to the Child Tax Credit during the COVID-19 pandemic – but Republicans voted them down in 2025 and opted instead to enact a more modest $200 increase to the Child Tax Credit’s annual refund (increase from $2,000 to $2,200) and a $100 increase to the Additional Child Tax Credit (increase from $1,600 to $1,700).
In the District of Columbia, there have been multiple efforts to implement a local DC Child Tax Credit since 2023. In both 2024 and 2025, the DC Council successfully passed and funded local Child Tax Credit plans for tax years 2025 and 2026 but both efforts were repealed by Mayor Bowser in her subsequent Fiscal Years 2026 and 2027 budget packages. The more recent and robust of the two DC CTC proposals, the one passed by Council in fall 2025, would have created a $1,000 per child tax credit – for children ages 18 and younger – starting in tax year 2026. Eligibility for the DC CTC was narrowly tailored to lower income families: single filer families earning less than $75,000 per year and joint filers earning less than $90,000. Restoring a local child tax credit and further enhancing the federal CTC should remain priorities for policy makers as keeping more money in the pockets of District families means promoting greater financial stability for Black and brown families and reducing child poverty.
The Impact of the Child Tax Credit
In the District, as of 2023, the median income for white households with children was estimated to be $306,100, compared to a median $56,900 for Black households with children, meaning, on average, Black children live in families with ⅕ the financial resources as white children. In 2024, nearly 3 out of 10 District children—37,000—lived in families with incomes below the federal poverty line (roughly $25,800 for a family of three in 2024), and roughly 80%2 of these children and families were Black.
When families— particularly lower income families—are able to save money on taxes, their financial stability can improve, in turn reducing the likelihood or severity of a child or family experiencing the harms of poverty. When the federal government expanded the Child Tax Credit in 2021 in response to the hardships of the COVID-19 pandemic—temporarily increasing the the per child rebate to $3,600 for children under age 6 and to $3,000 for children ages 6 through 17—there was a 30% drop in child poverty rates nationally, reducing food insecurity and other hardships among children. It prompted child poverty in the United States to drop to its lowest level on record, and lifted or eased poverty for an estimated 25.000 District children, proportionally representing one the largest reductions in state child poverty rates. Most families around the country used their CTC payments to cover routine expenses such as housing, utilities, clothing, and food as well as to save for emergencies and pay off debt.3
The impact of the 2021 federal CTC expansion is consistent with longstanding research on the benefits of keeping more cash in the pockets of lower-income and working families. Researchers found that a $1,000 increase in tax credits raises students’ test scores, which in turn increases students’ probability of college attendance and increased earnings as adults. Another study found that, for each additional $1,000 of a per-child Earned Income Tax Credit or CTC refund, the state saw a 5% decline in reports to child welfare authorities in the five weeks following the payments. They also found that youth reported fewer physical fights—and fewer criminal convictions during adolescence—after families received higher EITC benefits, theorizing that reduced household economic stress yields reductions in family conflict and helps youth stay positively engaged and out of trouble outside the home.
Funding and Participation
In tax year 2022, the most recent available data, 57,220 District tax returns included the federal Child Tax Credit, representing 16.4% of the total tax returns in the District. Separately, 32,260 returns included the Additional Child Tax Credit (9% of DC returns); this figure reflects some households retroactively applying for the 2021 COVID relief child tax credit boost as well as taxpayers who received both the standard CTC and the ACTC based on their specific tax situation. In total, $109,238,000 from the Child Tax Credit and $56,224,000 for the Additional Child Tax Credit went back into the pockets of District families to make it financially easier for them to care for their children. In the prior tax year, when the federal 2021 CTC expansion was in place, an estimated 60,000 District families – representing 93,000 children ages 17 and younger – benefited.
If the DC Child Tax Credit had retained its funding, it was predicted to return $55,260,000 to the pockets of District families earning up to $75,000 (single filer) or $90,000 (joint filer) per year in fiscal year 2026,4 which began October 1 of tax year 2025.
Recommendations
The Council should reestablish and fully fund a local District Child Tax Credit to help disrupt cycles of poverty in the District. A local CTC should specifically:
- Be targeted to families with the greatest financial challenges and provide a credit of at least $1,500 per child age 17 and younger (no limit on the number of eligible children), as recommended by our partners at DC Fiscal Policy Institute. The parameters could reduce child poverty in DC by 18%, lifting 4,700 children out of poverty and benefiting 80,000 children. To go further and cut District child poverty in half would require a $3,400 credit for children ages 6 and older and $4,080 for younger children ages 0-6, according to the Institute on Taxation and Economic Policy.
- Help more very low-income families receive their refundable DC CTC when it is implemented – and their federal Additional CTC – by establishing a tax filing assistance system for families who are not required to file taxes because their incomes are so low. Children living in zip codes 20002, 20011, 20019, 20020, 20032 – in wards 4, 5, 7, and 8 – are most likely to benefit from this assistance.
- Continue to ensure enactment of a DC CTC does not adversely impact recipients’ other benefits with income limits (e.g. SNAP, TANF, housing or childcare vouchers).
DC Action also supports federal expansion of the Child Tax Credit.