The Senate's failure to expand the child tax credit has implications for families.

• The child tax credit will decrease from $2,000 to $1,000 per eligible child after 2025, as tax cuts implemented by former President Donald Trump expire.

On Thursday, the Senate Republicans prevented the passage of a bill that aimed to increase the child tax credit, a significant tax advantage for numerous families.

Although the House bill passed in January had strong bipartisan support, Senate Republicans opposed it. Thursday's procedural vote was not anticipated to surpass the 60-vote threshold required to proceed. However, Senate Democrats forced the vote to demonstrate their election-year stances.

From the Senate floor, Chuck Schumer, D-N.Y., stated that today presents a chance for both sides to demonstrate their commitment to action, following their words of support.

Senator Mike Crapo, R-Idaho, the ranking member of the Senate Finance Committee, stated on Thursday that the vote was a "political stunt." He explained that Senate Republicans have reservations about the policy but are open to negotiating a "child tax credit solution that a majority of Republicans can endorse."

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Senators Joe Manchin and Bernie Sanders, both Democrats, voted against the measure.

The bill, if enacted, would enhance access to the child tax credit and retroactively increase the refundable portion for 2023, potentially triggering IRS refund checks.

According to estimates from the Urban-Brookings Tax Policy Center, eligible families could have seen an average tax cut of $680 for 2023 taxes.

The Center on Budget and Policy Priorities' vice president for federal tax policy, Chuck Marr, stated that it's a sad day for 16 million kids, especially after House Republicans withdrew their support.

Democrats still prioritize expanding the child tax credit, especially as the 2025 tax cliff nears, according to him.

The American Rescue Plan of 2021 temporarily increased the child tax credit to $3,000 from $2,000, with an additional $600 for children under age 6, and families received up to half via monthly payments.

In 2021, the child poverty rate dropped to a historic low of 5.2% due to the expansion, according to a Columbia University analysis. However, in 2022, the rate more than doubled to 12.4% once pandemic relief expired, the U.S. Census Bureau found.

2025 child tax credit negotiations

The Tax Cuts and Jobs Act of 2017, enacted by former President Donald Trump, temporarily increased the maximum child tax credit to $2,000 from $1,000 per child under age 17 and expanded eligibility with higher income phaseout ranges.

The TCJA limited the refundable portion of the credit, resulting in a reduction in benefits for lower-income families who do not owe taxes.

If Congress does not act, the child tax credit and other individual tax provisions will revert to their 2017 levels after 2025.

Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation, stated that next year, they will have a larger task due to the existence of an underlying credit that is more expensive to extend.

Whether Democrats and Republicans will compromise on the child tax credit's refundability and work requirement remains uncertain, he stated.

Watson suggested that families would benefit more from permanent updates rather than temporary changes that need to be renegotiated in Congress.

The future of child tax credit updates depends on the outcome of the upcoming election and the control of the White House and Congress.