Social conservatives who care about marriage should think twice about a “per-child” refundable Child Tax Credit

The United States Senate is currently debating H.R. 7024, a House-passed bill that would modify the Child Tax Credit (CTC) in several ways. One of the most consequential changes would increase the rate at which the refundable portion of the credit phases in, from the current 15% rate applied to all families to 15% times the number of dependent children. For example, the phase-in rate would increase to 45% for a family with three children.

Some social conservatives have advocated for H.R. 7024, and especially the per-child benefit expansion, because they believe it would better support low-income families. However, proponents should recognize that it would also exacerbate already high marriage penalties for working single mothers. If social conservatives want to encourage marriage, they should focus on increasing the maximum CTC benefit rather than increasing the CTC’s phase-in for families with multiple children.

72% of single moms work. It is thus concerning that working moms with relatively low earnings face a big penalty for getting married under current law. Why? By combining her income with that of a potential spouse, they would lose a substantial portion of their Earned Income Tax Credit (EITC), they would pay more federal income tax, and they would lose a significant amount of Supplemental Nutrition Assistance Program (SNAP, or food stamp) benefits. That’s not to mention the potential loss of other benefits such as housing and energy assistance, child care subsidies, and Medicaid. In short, combining her income with that of her potential spouse would raise their household income, resulting in more taxes and fewer benefits that are targeted to lower-income households.

Table 1 takes up the example of a single mother of three children who earns $20,000 annually, who considers marrying a potential spouse who also earns $20,000. Getting married increases their combined federal income tax liability (before credits) by about $600, reduces their combined EITC by about $2,500, and reduces their combined SNAP benefits by about $4,000. The only saving grace is that under existing law, their combined CTC grows by about $3,400, partly offsetting these other penalties. H.R. 7024 would eliminate most of the marriage incentive offered by the CTC, and as a result increase their net marriage penalty from about $3,800 to about $6,600, a $2,800 increase.

Table 1. Effect of Marriage on Income under Current Law and H.R. 7024, Tax Year 2023: Both Partners Work

	Unmarried	Married	Marriage Effect
Earnings	$40,000	$40,000	$0
Income tax (before credits)	–$615	–$1,230	–$615
Payroll tax	–$3,060	–$3,060	$0
EITC	$7,430	$4,928	–$2,502
SNAP	$10,044	$5,994	–$4,050
CTC (Current Law)	$2,625	$6,000	+$3,375
CTC (H.R. 7024)	$5,400	$6,000	+$600
Total Income (Current law)	$56,424	$52,632	–$3,792
Total Income (H.R. 7024)	$59,199	$52,632	–$6,567

Notes: All values correspond to the combined amount of income, taxes or transfers across both potential partners. One potential partner has three dependent children under age 17, and she earns $20,000 annually. The other potential partner has no dependent children under age 17, and he earns $20,000 annually. Current law is 2023 tax law. H.R. 7024 assumes current tax law except it sets the refundable CTC phase-in rate at 15% times the number of dependent children, and it increases the maximum refundable CTC to $1,800. SNAP benefits are based on SNAP benefit parameters that took effect October 1, 2023. Shelter costs are assumed to be $1,146 monthly for a single parent without children (median gross rent for a one-bedroom apartment in 2022) and $1,449 for a single parent with three children (median gross rent for a three-bedroom apartment in 2022). The potential partners are assumed to apply for SNAP separately when not married.

Some might point out that while the per-child refundable CTC would exacerbate the marriage penalty for working single moms, it could increase the marriage bonus for the 28% of single moms who don’t work. They would be correct, but it’s worth pointing out that non-working single moms already receive a large marriage bonus for marrying partners with low to moderate levels of earnings. This is because getting married would yield the couple a much larger EITC, a lower federal income tax burden due to the larger deduction for married couples, and little reduction or even a potential increase in SNAP benefits due to various deductions for calculating benefit amounts and the larger maximum benefit for larger households.

Table 2 takes up the example of a single mother of three children without earnings, who considers marrying a potential spouse who earns $20,000. Getting married reduces their combined federal income tax liability (before credits) by about $600, increases their combined EITC by about $7,400, and increases their combined SNAP benefits by about $700. Under current law, their combined CTC already grows by about $2,600 as a result of getting married, a reward that would more than double under H.R. 7024. Overall, H.R. 7024 would increase the marriage bonus for this example couple from about $11,400 to about $14,100.

Table 2. Effect of Marriage on Income under Current Law and H.R. 7024, Tax Year 2023: One Partner Works

	Unmarried	Married	Marriage Effect
Earnings	$20,000	$20,000	$0
Income tax (before credits)	–$615	$0	+$615
Payroll tax	–$1,530	–$1,530	$0
EITC	$0	$7,430	+$7,430
SNAP	$11,676	$12,358	+$682
CTC (Current Law)	$0	$2,625	+$2,625
CTC (H.R. 7024)	$0	$5,400	+$5,400
Total Income (Current law)	$29,531	$40,883	+$11,352
Total Income (H.R. 7024)	$29,531	$43,658	+$14,127

Notes: All values correspond to the combined amount of income, taxes or transfers across both potential partners. One potential partner has three dependent children under age 17, and she earns $0 annually. The other potential partner has no dependent children under age 17, and he earns $20,000 annually. Current law is 2023 tax law. H.R. 7024 assumes current tax law except it sets the refundable CTC phase-in rate at 15% times the number of dependent children, and it increases the maximum refundable CTC to $1,800. SNAP benefits are based on SNAP benefit parameters that took effect October 1, 2023. Shelter costs are assumed to be $1,146 monthly for a single parent without children (median gross rent for a one-bedroom apartment in 2022) and $1,449 for a single parent with three children (median gross rent for a three-bedroom apartment in 2022). The potential partners are assumed to apply for SNAP separately when not married.

It doesn’t make sense to make already large marriage penalties worse for the majority of single moms who work, in order to increase already large marriage bonuses for the minority of single moms who don’t work.

How could the CTC be reformed to encourage marriage? The best way is to increase the maximum CTC benefit, the real value of which has eroded by 23% since 2018, when the CTC was doubled to offset the elimination of exemptions for dependents under prior law. Increasing the maximum per-child CTC to $2,500 from its current $2,000 level would offset the inflation-induced erosion of the CTC’s value since 2018, and it would increase marriage incentives by up to $1,500 for a single mother with three children.

Of course, increasing the maximum CTC would not help families who don’t currently pay any federal income tax—except for working single parents who decided to get married as a result of the change. Some argue we should do more for these low-income families, on top of existing programs like the EITC, SNAP, housing and energy assistance, child care subsidies and Medicaid. That’s a reasonable position, but proponents of this change should understand that it would come at the cost of discouraging marriage.

Before rushing to embrace the CTC changes in H.R. 7024, social conservatives should think twice about whether worsening already large marriage penalties is a price worth paying.