Stronger Start for Working Families Act: Eliminating the CTC earnings threshold

On January 8th, Senators Maggie Hassan (D-NH) and Todd Young (R-IN) introduced the Stronger Start for Working Families Act. The bill would remove the $2,500 earnings requirement for the refundable portion of the federal Child Tax Credit (CTC), resulting in the credit phasing in from the first dollar of earnings.

We at PolicyEngine have analyzed the effects of this proposed change.

Key results:

• Costs $14.6 billion over ten years (2026-2035)
• Benefits 5.9% of Americans
• Reduces child poverty by 0.4%
• Lowers the Gini index of inequality by 0.024%

Use PolicyEngine to view the full results or calculate the effect on your household.

The Child Tax Credit provides up to $2,200 per qualifying child, with up to $1,700 of that amount refundable as the Additional Child Tax Credit (ACTC) in 2026. The refundable portion phases in at 15% of earned income above $2,500, which means families with lower earnings may not receive the full refundable credit.

The Stronger Start for Working Families Act would eliminate this $2,500 threshold, meaning families would begin receiving the refundable CTC from their first dollar of earned income. For example, a single parent with one child currently needs to earn $13,833 to receive the full $1,700 refundable credit ($1,700 ÷ 15% + $2,500 = $13,833). Under the reform, they would only need $11,333 of earnings to reach the maximum refundable amount ($1,700 ÷ 15% = $11,333). Figure 1 illustrates this phase-in pattern for current law and the proposed reform.

The reform primarily benefits lower-income families with children who do not receive the full refundable portion of the CTC. A single parent with two children earning $15,000 would see their net income increase by $375.

The maximum benefit any household can receive is $375, regardless of the number of children (15% × $2,500 = $375). Household benefits begin phasing out once families reach their maximum refundable credit amount. For a parent with two children, this phase-out occurs between $22,667 and $25,167 of employment income. Since the credit phases in at a flat 15% rate rather than 15% per child, households with more children reach their maximum refundable amount at greater income levels, pushing the phase-out range higher. Figure 2 displays the change in net income for households as earnings rise, based on the number of children. Marital status does not affect the benefit amount.

Additionally, due to immigration requirements enacted by H.R. 1, households without a valid Social Security number would not benefit from this policy, as they are ineligible for the CTC.

The Stronger Start for Working Families Act would cost $1.6 billion in 2026, according to PolicyEngine's static modeling. Over ten years, the bill would lower federal revenues by $14.6 billion.

The reform would raise the net income of 5.9% of Americans, with beneficiaries concentrated in the lower income deciles. Figure 3 shows the share of residents in each income decile that would gain from the reform.

We project that the Stronger Start for Working Families Act would reduce child poverty by 0.4%, as determined by the Supplemental Poverty Measure, while lowering deep child poverty by 0.024%. The proposed legislation would also reduce the Gini index of income inequality by 0.024%.

The Stronger Start for Working Families Act would expand the Child Tax Credit's reach by eliminating the $2,500 earnings threshold. This reform would raise the net income of 5.9% of American residents, providing up to $375 for those who currently receive less than the maximum refundable credit.

As policymakers evaluate reforms such as these, analytical tools like PolicyEngine offer critical insights into the impacts on diverse household compositions and the broader economy.

We invite you to explore our additional analyses and use PolicyEngine to calculate your own tax benefits or design custom policy reforms.