Working Family Tax Relief Act of 2026

The bill modifies Section 24 of the Internal Revenue Code. The Child Tax Credit rises from $2,000 per child to $3,600 for children under age 6 and $3,000 for children ages 6 through 17. The credit becomes fully refundable, meaning families with no federal income tax liability receive the full amount as a payment.

The bill also restructures payment timing. Half the annual credit is paid in advance monthly installments (matching the temporary 2021 design), and half at tax filing. Income phase-outs begin at $150,000 for single filers and $300,000 for joint filers.

To offset the projected $1.4 trillion cost over ten years, the bill raises the corporate income tax rate from 21 to 25 percent, restores the corporate alternative minimum tax to 17 percent, and closes the carried-interest exclusion. The bill does not modify individual income tax rates.

The economic dispute is sharp and well-defined. Supporters cite work from the Columbia Center on Poverty and Social Policy estimating that the temporary 2021 expansion cut child poverty roughly in half, and argue that making the credit fully refundable is the most efficient anti-poverty tool currently available.

Skeptics raise two concerns. Work by Bruce Meyer and Kevin Corinth (University of Chicago and AEI) argues that the labor-force effects of a fully refundable credit are meaningful and undercut some of the measured poverty reductions. The Tax Foundation argues separately that a 25 percent corporate rate would meaningfully reduce business investment. A further concern from some progressive economists is that monthly payments, while popular with families, create reconciliation problems at tax time and that lump-sum payment may be administratively simpler.

The bill's permanence is also contested on procedural grounds, since the 2021 version had a one-year sunset.