Child tax credit made fully refundable

(a) In general Subpart C of part IV of subchapter A of chapter 1 of subtitle A is amended by inserting after section 36B the following new section: 36D. Child tax credit (a) Allowance of credit There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of— (1) $2,000 for each of up to 3 qualifying children of the taxpayer for which the taxpayer is allowed a deduction under section 151, plus (2) $500 for each other such qualifying child of the taxpayer. (b) Limitations (1) Limitation based on adjusted gross income The amount of the credit allowable under subsection (a) shall be reduced (but not below zero) by $50 for each $1,000 (or fraction thereof) by which the taxpayer’s modified adjusted gross income exceeds the threshold amount. For purposes of the preceding sentence, the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933. (2) Threshold amount For purposes of paragraph (1), the term threshold amount means— (A) $110,000 in the case of a joint return, (B) $75,000 in the case of an individual who is not married, and (C) $55,000 in the case of a married individual filing a separate return. For purposes of this paragraph, marital status shall be determined under section 7703. (c) Qualifying child For purposes of this section— (1) In general The term qualifying child means a qualifying child of the taxpayer (as defined in section 152(c)) who has not attained age 17. (2) Exception for certain noncitizens The term qualifying child shall not include any individual who would not be a dependent if subparagraph (A) of section 152(b)(3) were applied without regard to all that follows resident of the United States. (d) Social security number required No credit shall be allowed under this section to a taxpayer with respect to any qualifying child unless the taxpayer includes the social security number of the taxpayer (and the taxpayer’s spouse, in the case of a joint return) and of such child on the return of tax for the taxable year. For purposes of the preceding sentence, the term social security number means a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued— (1) to a citizen of the United States or pursuant to subclause (I) (or that portion of subclause (III) that relates to subclause (I)) of section 205(c)(2)(B)(i) of the Social Security Act, and (2) before the due date for such return. (e) Taxable year must be full taxable year Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall be allowable under this section in the case of a taxable year covering a period of less than 12 months. (f) Restrictions on taxpayers who improperly claimed credit in prior year (1) Taxpayers making prior fraudulent or reckless claims (A) In general No credit shall be allowed under this section for any taxable year in the disallowance period. (B) Disallowance period For purposes of subparagraph (A), the disallowance period is— (i) the period of 10 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to fraud, and (ii) the period of 2 taxable years after the most recent taxable year for which there was a final determination that the taxpayer’s claim of credit under this section was due to reckless or intentional disregard of rules and regulations (but not due to fraud). (2) Taxpayers making improper prior claims In the case of a taxpayer who is denied credit under this section for any taxable year as a result of the deficiency procedures under subchapter B of chapter 63, no credit shall be allowed under this section for any subsequent taxable year unless the taxpayer provides such information as the Secretary may require to demonstrate eligibility for such credit. (g) Application of credit in possessions (1) Mirror code possessions (A) In general The Secretary shall pay to each possession of the United States with a mirror code tax system amounts equal to the loss (if any) to that possession by reason of the application of this section (determined without regard to this subsection) with respect to taxable years beginning after 2020. Such amounts shall be determined by the Secretary based on information provided by the government of the respective possession. (B) Coordination with credit allowed against United States income taxes No credit shall be allowed under this section for any taxable year to any individual to whom a credit is allowable against taxes imposed by a possession of the United States with a mirror code tax system by reason of the application of this section in such possession for such taxable year. (C) Mirror code tax system For purposes of this paragraph, the term mirror code tax system means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. (2) Puerto Rico The credit determined under this section shall be allowable to any bona fide resident of Puerto Rico (within the meaning of section 937(a)). (3) American Samoa (A) In general The Secretary shall pay to American Samoa amounts estimated by the Secretary as being equal to the aggregate benefits that would have been provided to residents of American Samoa by reason of the application of this section for taxable years beginning after 2020 if the provisions of this section had been in effect in American Samoa (applied as if American Samoa were the United States and without regard to the application of this section to bona fide residents of Puerto Rico under subsection (i)(1)). (B) Distribution requirement Subparagraph (A) shall not apply unless American Samoa has a plan, which has been approved by the Secretary, under which American Samoa will promptly distribute such payments to its residents. (C) Coordination with credit allowed against United States income taxes (i) In general In the case of a taxable year with respect to which a plan is approved under subparagraph (B), this section (other than this subsection) shall not apply to any individual eligible for a distribution under such plan. (ii) Application of section in event of absence of approved plan In the case of a taxable year with respect to which a plan is not approved under subparagraph (B) rules similar to the rules of paragraph (2)(B) shall apply with respect to bona fide residents of American Samoa (within the meaning of section 937(a)). (4) Treatment of payments For purposes of section 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section. (h) Inflation adjustment (1) In general In the case of any taxable year beginning after 2025, the dollar amounts in subsections (a) and (b) shall be increased by an amount equal to— (A) such dollar amount, multiplied by (B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2024 for calendar year 2016 in subparagraph (A)(ii) thereof. (2) Rounding If any increase under paragraph (1) is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50.. (b) Clerical amendment The table of sections for subpart C of part IV of subchapter A of chapter 1 of subtitle A is amended by inserting after the item relating to section 36B the following new section: Sec. 36D. Child tax credit.. (c) Conforming amendments (1) The table of sections for subpart A of part IV of subchapter A of chapter 1 of subtitle A is amended by striking the item relating to section 24. (2) Section 26(b)(2) is amended by inserting and after the comma in subparagraph (X), by striking, and at the end of subparagraph (Y), and by striking subparagraph (Z). (3) Section 45R(f)(3)(B) is amended by inserting (as in effect on the day before the date of the enactment of the All-Americans Tax Relief Act of 2025) after section 24(d)(2)(C). (4) Section 48D(d)(4) is amended by striking section 24(k) and inserting section 36D(j). (5) Section 152(f)(6)(B)(ii) is amended by striking section 24 and inserting section 36D. (6) Section 501(c)(26) is amended by striking section 24(c) in the matter following subparagraph (D) and inserting section 36D(c). (7) Section 3402(f)(1)(C) is amended by striking section 24 (determined after application of subsection (j) thereof) and inserting section 36D. (8) Section 6103(l)(13)(A)(v) is amended by striking section 24 and inserting section 36D. (9) Section 6213(g)(2) is amended— (A) in subparagraph (I), by striking section 24(e) and inserting section 36D(d), (B) in subparagraph (L), by striking 24, 32 and inserting 32, 36D, and (C) in subparagraph (P), by striking section 24(g)(2) or an entry on the return claiming the credit under section 24 and inserting section 36D(f)(2) or an entry on the return claiming the credit under section 36D. (10) Section 6402(m) is amended by striking section 24 (by reason of subsection (d) thereof) and inserting section 36D. (11) Section 6417(f) is amended by striking section 24(k) and inserting section 36D(h). (12) Subchapter B of chapter 65 of subtitle F is amended by repealing sections 6428, 6428A, 6428B, and 6429 and the table of sections for such subchapter is amended by striking the items relating to such sections. (13) Section 6695(g)(2) is amended by striking section 24, 25A(a)(1), or 32 and inserting section 25A(a)(1), 32, or 36D. (14) Chapter 77 of subtitle F is amended by repealing section 7527A and the table of sections for such chapter is amended by striking the item relating to such section. (d) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2026.