How Tax Cuts and Jobs Act Affect Kids

Posted: https://povertycenter.columbia.edu/publication/tax-cuts-and-jobs-act-effect-on-children

Published: January 13th, 2025

The 2025 tax debate—prompted by the expiration of key provisions from the 2017 Tax Cut and Jobs Act (TCJA)—has important implications for the lives of people and families with low and moderate incomes. While existing research has often highlighted the degree to which TCJA provided the largest benefits to tax filers with the highest incomes, less is known about how it specifically affected children—especially children living in or near poverty relative to those far above the poverty threshold. As policymakers consider future tax changes, it is important to understand how TCJA re-shaped the baseline of how children and families with low and moderate incomes are treated in the tax code today.

In this brief, they summarize the changes to the tax code made under TCJA and then ask: How did TCJA affect children in families with low incomes relative to children in families with higher incomes? Given that some children disproportionately live in families with low incomes, we also ask: How did TCJA affect children across different demographic groups, including by race and ethnicity, metro- and rural-area residence, family type (single- and dual-parent families), and family size?

Key Findings

• In 2023, half of all children (49.1%) lived in families with low incomes—defined here as families with income less than twice the national poverty line, or less than approximately $78,000 per year for a two-parent, two-child family—yet the Tax Cuts and Jobs Act (TCJA) delivered the fewest benefits to children in this group.
• Just 16% of children live in families with incomes over four times the poverty line, or more than $156,000 for a two-parent, two-child family, but TCJA delivered benefits to this group at a level 10 times larger than the benefits delivered to children in families with low incomes. 
• The inequity in TCJA tax benefits across income levels particularly disadvantaged children who live in families with lower incomes: for example, median gains for Black and Latino children were half those of White children, gains for children in single-parent families were one-third of those in dual-parent families, and children in rural areas gained less from TCJA than children in urban areas.
• The 2025 tax debate offers an opportunity to address these inequities and ensure that future policy decisions do not overlook the half of children who gained the least from TCJA.