With the passage of the One Big Beautiful Bill (OBBB), Republicans are heading into the midterm elections eager to highlight their legislative accomplishments. Chief among them are the changes to the child tax credit — a focus that is both strategic and familiar. Since the 1980s, Republicans have successfully claimed ownership of pro-family policy, and the child tax credit has long been central to that identity.
The child tax credit traces its pre-history to the Reagan Administration. At the time, the tax exemption for dependent children was the primary tool for supporting working parents with the cost of raising the next generation. A prolonged period of high inflation under the Carter presidency had eroded the inflation-adjusted value of the exemption, leading to backdoor tax increases on middle class families. Reagan responded by increasing the value of the exemption and indexing it for the first time since the introduction of the federal income tax. Though controversial at the time, the move proved enduring — and became a defining element of his economic legacy, helping launch a pro-family renaissance within the GOP.
Since the 1980s, Republicans have successfully claimed ownership of pro-family policy, and the child tax credit has long been central to that identity.
Soon after, Republicans shifted their focus to introducing a child tax credit as the “crown jewel” of Newt Gingrich’s Contract with America. Introduced in 1997, it quickly proved popular and the Bush Administration increased the maximum credit from $500 to $1,000 and made it “partially refundable” to expand access to more low-income working families. Fast forward to 2017 and we can begin to see Republican efforts to close the loop on important family policy changes that began under Reagan. The Tax Cuts and Jobs Act consolidated the dependent exemption and child tax credit into one more generous credit and eliminated marriage penalties that had been built into the original child tax credit. For all its progress, the 2017 reform had one fatal weakness. While the dependent exemption had been indexed since Reagan, the child tax credit had never been indexed and remained that way in the wake of the new tax law.
The changes Republicans made to the child tax credit as part of OBBB marked the closing of another chapter in the credit’s long history. The new law increased the maximum credit from $2,000 to $2,200 per child and finally indexed this amount for the first time since the credit was introduced decades ago.
The technical nature of the change eludes its importance. During the Biden presidency, middle-class families struggled to keep up with the surging cost of living. They were battered by years of high inflation that ate away at their paychecks and their tax refunds. The inflation-adjusted value of the child tax credit dropped by 25% since the 2017 expansion. What Reagan did for the dependent exemption in the 1980s, Republicans did for the child tax credit in 2025 – reversing some of what was eroded by inflation and indexing it to ensure that inflation will never result in backdoor tax increases on middle class families again.
While this warrants a victory lap, it also raises the question of what is next for the child tax credit. The Family First Act, from Senator Jim Banks (R-IN) and Rep. Blake Moore (R-UT), provides a useful north star for where Republicans should ultimately take the child tax credit. Their comprehensive overhaul would radically simplify the tax code for families by consolidating a range of child-related tax benefits and expand access by phasing in the credit sooner so that more working families would be eligible for the full credit. Such an ambitious reform will require extensive education and outreach to gain broader support within the GOP. This will take time.
As congressional Republicans consider the next phase of the child tax credit in 2026, they would be wise to build on — and support — these efforts.
In the meantime, the bipartisan Stronger Start for Working Families Act, sponsored by Senators Todd Young (R-IN) and Maggie Hassan (D-NH), offers a sensible incremental answer. Their proposal would extend the credit to more low-income working families by allowing the credit to phase in starting with the first dollar of earnings, rather than requiring families to earn at least $2,500 before receiving any benefit.
Under this approach, a married couple in Ohio with two young children — where one parent works full time at the state minimum wage while the other stays home to care for the kids — would see their work rewarded with a significant boost in their child tax credit. It builds on the longstanding American promise: that if you work hard and play by the rules, then you should be able to get ahead in life.
Pro-work, pro-family reforms like this have been a staple of GOP politics for decades. As congressional Republicans consider the next phase of the child tax credit in 2026, they would be wise to build on — and support — these efforts.
Joshua McCabe is the Director of Social Policy at the Niskanen Center. He focuses on issues related to child poverty and household stability. McCabe’s work has been featured in the Washington Post, the National Review, the Hill, and more.