The One Big Beautiful Bill Act’s (OBBBA’s) changes to the child tax credit (CTC) and other programs, like tax benefits for child care, the adoption tax credit, and tax-advantaged savings accounts for children called “Trump accounts,” are projected to increase tax benefits for children in nominal terms by over $30 billion in fiscal year 2034. These changes will primarily benefit middle- and high-income families. Research shows that investing in children with low incomes is a more effective way to reduce child poverty, improve children’s health, and allow families to invest in their children’s futures.

While OBBBA will increase tax benefits for children in nominal terms, spending on children through the tax code as a share of the economy is expected to decline over time. In other words, OBBBA increases spending on children through the tax code, but not enough to keep up with the growing economy.

Why This Matters

About 30 percent of federal spending on children was delivered through the income tax system—the largest category of federal spending on children. Three tax benefits, the CTC (54 percent), the earned income tax credit (27 percent), and the exclusion for employer-sponsored health insurance (14 percent), make up 95 percent of all tax spending on children. OBBBA’s largest change to tax benefits for families with children—in terms of federal spending and number of children affected—was to the CTC.

Tax benefits for children tend to provide benefits across the income distribution, unlike other spending programs on children, like Medicaid and the Supplemental Nutrition Assistance Program (SNAP), which are more targeted toward low-income families and were reduced by OBBBA.

How We Did It

We used preliminary data from Kids’ Share 2025, the Tax Policy Center’s microsimulation model, and the Congressional Budget Office to estimate child tax benefits for children, both in nominal terms and as a share of the economy, and to examine the distributional impact of changes to the CTC made by OBBBA.