TCJA Sunset and Child Tax Credit — What Could Change in 2026
The Tax Cuts and Jobs Act of 2017 doubled the Child Tax Credit from $1,000 to $2,000 per child. Those provisions were designed to expire after 2025. Whether Congress extends them, modifies them, or lets them lapse determines whether millions of families see a significant tax increase.
See how different scenarios affect your family with the Child Tax Credit Calculator.
What TCJA Changed for the CTC
| Feature | Pre-TCJA (before 2018) | Current TCJA Rules | If TCJA Expires |
|---|---|---|---|
| Credit per child | $1,000 | $2,000 | Back to $1,000 |
| Refundable portion | $1,000 (ACTC) | $1,700 (ACTC) | Back to $1,000 |
| Phase-out start (MFJ) | $110,000 | $400,000 | Back to $110,000 |
| Phase-out start (Single) | $75,000 | $200,000 | Back to $75,000 |
| Age limit | Under 17 | Under 17 | Under 17 |
| Other Dependent Credit | Did not exist | $500 | Eliminated |
The phase-out change is enormous. Under pre-TCJA rules, a married couple earning $150,000 would see a reduced credit. Under current rules, they get the full amount with no reduction.
Impact by Income Level
Family of 4 (married, 2 children) — Current vs. Pre-TCJA:
| Income | Current CTC | Pre-TCJA CTC | Annual Loss |
|---|---|---|---|
| $50,000 | $4,000 | $2,000 | −$2,000 |
| $80,000 | $4,000 | $2,000 | −$2,000 |
| $120,000 | $4,000 | $1,500 | −$2,500 |
| $150,000 | $4,000 | $0 | −$4,000 |
| $200,000 | $4,000 | $0 | −$4,000 |
| $400,000 | $4,000 | $0 | −$4,000 |
| $430,000 | $2,500 | $0 | −$2,500 |
Middle-income families ($100K-$200K) would feel the sharpest impact — they currently get the full credit but would get nothing under pre-TCJA rules due to the lower phase-out.
The $500 Other Dependent Credit Would Disappear
The ODC didn't exist before TCJA. If the law sunsets, families claiming the $500 Other Dependent Credit for:
- Children age 17+
- Elderly parents
- College-age dependents
...would lose that credit entirely. There's no pre-TCJA equivalent.
What Congress Might Do
Several scenarios are on the table:
Scenario 1 — Full Extension Congress extends all TCJA provisions as-is. CTC stays at $2,000 with $400K phase-out. Most likely if the same party controls Congress and White House.
Scenario 2 — Partial Extension Congress keeps the $2,000 CTC but lowers the phase-out threshold — perhaps to $200,000 or $250,000 (MFJ). This is a compromise position.
Scenario 3 — Enhancement Some proposals would increase the CTC to $3,000 or $3,600 (as temporarily enacted in 2021) and make it fully refundable. Unlikely without bipartisan support.
Scenario 4 — Full Sunset Congress fails to act, and all TCJA provisions expire. CTC drops to $1,000, phase-out drops to $110,000. This is the default if nothing passes.
Timeline
- Now through December 2025: Legislative negotiations
- January 2026: If no action, pre-TCJA rules technically apply
- Tax filing season 2027: First returns filed under new (or old) rules
- Retroactive changes: Congress can (and often does) pass retroactive tax changes, making planning difficult
This uncertainty is why financial advisors recommend planning for both scenarios — especially if your income puts you near the old phase-out thresholds.
What You Can Do Now
If your income is $110K-$200K (single) or $150K-$400K (MFJ):
You're in the zone that benefits most from TCJA's expanded CTC. Consider:
- Accelerating income into 2025 if you expect the CTC to shrink in 2026 (Roth conversions, bonus timing, stock sales)
- Maximizing pre-tax contributions to lower AGI if the phase-out drops — every dollar below the threshold preserves your credit
- Building a tax reserve for potentially higher taxes
If your income is under $80,000:
Your CTC would drop from $2,000 to $1,000 per child, but you'd still get something. The refundable portion (ACTC) would also shrink. Adjust your withholding or estimated payments if the credit changes.
Track any updates through the IRS official page (irs.gov) and use the Federal Tax Calculator to model different scenarios.
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