IRS Data: Families Saw Significant Tax Cut from Trump Expansion of Child Tax Credit

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Posted by Alex Hendrie on Friday, September 25th, 2020, 1:30 PM PERMALINK

American families have seen significant tax reduction due to the Trump-Republican expansion of the child tax credit as noted in IRS 2018 Statistics of Income (SOI) data. 

The Tax Cuts and Jobs Act (TCJA) increased the child tax credit from $1,000 to $2,000 per dependent under 17. The phase out thresholds were increased from $75,000 to $200,000 for single filers and $110,000 to $400,000 for joint filers. The TCJA also created a $500 tax credit for non-child dependents.

These reforms resulted in significant tax reductions for American families between 2017 and 2018:

  • In 2017, 22 million households earning $200,000 or less took the child tax credit. These households received an average tax credit of $1,213.
     
  • In 2018, 36 million households earning $200,000 or less took the child and other dependent tax credit. These households received an average credit of $2,002.
     
  • In 2017, 16.6 million households earning between $25,000 and $100,000 took the child tax credit. These households received an average tax credit of $1,271.
     
  • In 2018, 23.3 million households earning between $25,000 and $100,000 took the child and other dependent tax credit. These households received an average tax credit of $1,912.
     

As ATR previously noted, middle class American families saw the biggest tax cut from the TCJA. 

Americans with incomes between $50,000 and $100,000 saw their tax liability drop by an average of 13 percent, twice as much as Americans with income above $1 million, who saw their tax liability drop by an average of 5.8 percent.

Photo Credit: Gage Skidmore

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