The child tax credit (CTC) includes a phase-in of the credit at lower incomes and a phaseout at higher incomes, both of which promote work. The pandemic-era CTC temporarily eliminated the phase-in and lengthened the phaseout, both of which increased work disincentives.

Congress should set the maximum CTC amount at a modest per-child level, above the level it was at before the Tax Cuts and Jobs Act of 2017 but below the American Rescue Plan Act of 2021 level. That is an appropriate compromise for determining how many families the CTC phaseout affects. It should remove the $2,500 earned income threshold for qualifying for the refundable credit while retaining the CTC phase-in. This reform would strengthen the CTC’s work incentives; direct more of its benefits to working, poor families; and reduce poverty.