Permanent expansion of child tax credit

(a) In general Section 24 of the Internal Revenue Code of 1986 is amended— (1) by striking subsections (a) through (e) and inserting the following new subsections: (a) Allowance of credit (1) In general There shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the applicable percentage of the base credit amount. (2) Base credit amount For purposes of paragraph (1), the base credit amount shall be an amount equal to the sum of— (A) for each qualifying child who has not attained age 6 as of the close of the calendar year in which the taxable year of the taxpayer begins, $4,200, and (B) for each qualifying child of the taxpayer who is not described in subparagraph (A), $3,000. (b) Applicable percentage and limitation based on adjusted gross income (1) Applicable percentage For purposes of subsection (a), the applicable percentage shall be— (A) in the case of a taxpayer whose modified adjusted gross income is equal to or greater than $20,000, 100 percent, or (B) in the case of a taxpayer whose modified adjusted gross income is less than $20,000, an amount (expressed as a percentage) equal to the quotient of— (i) the modified adjusted gross income of the taxpayer, divided by (ii) $20,000. (2) Limitation 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— (A) in the case of a joint return, $400,000, or (B) in any other case, $200,000. (3) Modified adjusted gross income For purposes of this subsection, the term modified adjusted gross income means adjusted gross income increased by any amount excluded from gross income under section 911, 931, or 933. (4) Adjustment for inflation (A) In general In the case of a taxable year beginning after 2026, each of the $20,000 amounts in paragraph (1) shall be increased by an amount equal to— (i) $20,000, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting 2025 for 2016 in subparagraph (A)(ii) thereof. (B) Rounding If any increase under this paragraph is not a multiple of $100, such increase shall be rounded to the next lowest multiple of $100. (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 as of the close of the calendar year in which the taxable year of the taxpayer begins. (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) Limitation on number of children The number of qualifying children of a taxpayer for which a credit may be allowed under this section for any taxable year shall not exceed 6. (e) Identification requirements (1) In general No credit shall be allowed under this section to a taxpayer who does not include on the return of tax for the taxable year— (A) the social security number of the taxpayer (and, in the case of a joint return, the social security number of at least 1 spouse), and (B) with respect to any qualifying child, the name and the social security number of such qualifying child. (2) Social security number defined For purposes of this subsection, the term social security number means, with respect to a return of tax, a social security number issued to an individual by the Social Security Administration, but only if the social security number is issued— (A) 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 (B) before the due date of filing such return., (2) by striking subsections (h) through (j), (3) in subsection (k)— (A) by striking paragraph (2) and inserting the following: (2) Puerto Rico In the case of any bona fide resident of Puerto Rico (within the meaning of section 937(a)), the credit determined under this section shall be allowable to such resident., and (B) in paragraph (3)— (i) in subparagraph (A), by striking and without regard to the application of this section to bona fide residents of Puerto Rico under subsection (i)(1), and (ii) in subparagraph (C), by striking clause (ii) and inserting the following: (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) shall apply with respect to bona fide residents of American Samoa (within the meaning of section 937(a))., and (4) by redesignating subsection (k) (as amended by paragraph (3)) as subsection (h). (b) Treatment as fully refundable (1) Credit moved to subpart relating to refundable credits (A) In general The Internal Revenue Code of 1986 is amended— (i) by redesignating section 24, as amended by this section, as section 36C, and (ii) by moving such section, as so redesignated, from subpart A of part IV of subchapter A of chapter 1 to the location immediately after section 36B in subpart C of part IV of subchapter A of chapter 1. (B) Technical amendment Subsection (a) of section 36C of such Code, as moved and redesignated by subparagraph (A), is amended by striking this chapter and inserting this subtitle. (C) Clerical amendments (i) The table of sections for subpart A of part IV of subchapter A of chapter 1 of such Code is amended by striking the item relating to section 24. (ii) The table of sections for subpart C of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 36C. Child tax credit.. (2) Conforming amendments (A) Section 26(b)(2) of such Code is amended— (i) by striking, and at the end of subparagraph (Y) and inserting a period, (ii) by inserting and at the end of subparagraph (X), and (iii) by striking subparagraph (Z). (B) Section 45R(f)(3)(B) of such Code is amended to read as follows: (B) Special rule Any amounts paid pursuant to an agreement under section 3121(l) (relating to agreements entered into by American employers with respect to foreign affiliates) which are equivalent to the taxes referred to in subparagraph (A) shall be treated as taxes referred to in such subparagraph.. (C) Section 48D(d)(4) of such Code is amended by striking section 24(k) and inserting section 36C(h). (D) Section 152(f)(6)(B)(ii) of such Code is amended by striking section 24 and inserting section 36C. (E) Section 501(c)(26) of such Code is amended in the flush matter at the end by striking section 24(c)) and inserting section 36C(c)). (F) Section 3402(f)(1)(C) of such Code is amended by striking section 24 (determined after application of subsection (j) thereof) and inserting section 36C. (G) Section 6103(l)(13)(A)(v) of such Code is amended by striking section 24 and inserting section 36C. (H) Section 6211(b)(4)(A) of such Code is amended— (i) by striking 24 by reason of subsections (d) and (i)(1) thereof,, (ii) by inserting and 36C after 36B,, and (iii) by striking, 6428, 6428A, 6428B, and 7527A. (I) Section 6213(g)(2) of such Code is amended— (i) in subparagraph (I), by striking correct TIN required under section 24(e) and inserting correct social security number required under section 36C(e), (ii) in subparagraph (L)— (I) by striking 24, or 32 and inserting 32, or 36C, and (II) by striking TIN each place it appears and inserting TIN or social security number, and (iii) in subparagraph (P)— (I) by striking 24(g)(2) and inserting 36C(g)(2), and (II) by striking section 24 and inserting section 36C. (J) Section 6402(m) of such Code is amended by striking section 24 (by reason of subsection (d) thereof) or 32 and inserting section 32 or 36C. (K) Section 6417(f) of such Code is amended by striking section 24(k) and inserting section 36C(h). (L) Section 6695(g)(2) of such Code is amended by striking 24, 25A(a)(1), or 32 and inserting 25A(a)(1), 32, or 36C. (M) Section 1324(b)(2) of title 31, United States Code, is amended— (i) by striking 24,, and (ii) by inserting 36C, after 36B,. (N) Section 1613(a)(11)(A) of the Social Security Act (42 U.S.C. 1382b(a)(11)(A)) is amended by striking section 24 of the Internal Revenue Code of 1986 (relating to child tax credit) by reason of subsection (d) thereof and inserting section 36C of the Internal Revenue Code of 1986 (relating to child tax credit). (O) Chapter 77 of such Code is amended by striking section 7527A (and the item relating to such section in the table of sections for such chapter). (c) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2025.