CONSTRUCTING A CHILD TAX CREDIT THAT FITS EVERY STATE

Middle-income households typically see a relatively large share of the total tax benefit from a CTC because the size of the tax cut is related to the number of eligible children in the household and not the household’s income level (as with individual income tax rate cuts). [...] In 2016, the Tax Policy Center expanded the model to include state tax policies and interactions between state and federal tax systems.14 The Tax Policy Center state tax model provided the revenue and distributional estimates in this report. [...] For each hypothetical CTC, we estimated the credit’s annual revenue cost, the average annual tax cut for eligible families, the percentage of households in the state receiving a tax cut, and the share of the total tax benefit going to households by AGI group. [...] Lowering the credit amount, restricting the child age eligibility, enacting a low-income threshold phase-out, and making the credit nonrefundable can all lower the annual revenue cost of the CTC, but they all do so by limiting the size of the tax cut for eligible households or excluding some families from the benefit. [...] For more information, visit taxpolicycenter.org or email info@taxpolicycenter.org mailto:info@taxpolicycenter.org the policy levers inside a state child tax credit What is the dollar amount of the credit? What are the age eligibility rules for children? What are the income eligibility rules (i.e., the phase-out threshold) for the taxpayer? Is the credit refundable or nonrefundable? Is the credit a.