The Heritage Foundation

Center for Data Analysis Report #99-03 on Taxes

March 22, 1999

March 22, 1999 | Center for Data Analysis Report on Taxes

Children Who Qualify for a Child Tax Credit: an Update by Congressional District

The Taxpayer Relief Act of 1997 (P.L.105-34) contains a provision called the child tax credit. This new credit permits qualified taxpayers to reduce their tax liability by $500 for each dependent under age 17. The credit diminishes in value for married taxpayers with adjusted gross incomes of $110,000 or more, and for taxpayers who file as heads of household or as singles who have adjusted gross incomes of $75,000 or more.2 Congress is phasing in the credit over two years: It was worth $400 dollars per child for tax year 1998 and $500 per child for tax year 1999.

The Heritage Foundation first published several studies of the child tax credit during the congressional debate on this tax policy change.3 Since Congress passed the Taxpayer Relief Act of 1997, little additional statistical attention has focused on how many children would qualify for the child tax credit.4

This report uses new data from the Bureau of the Census to update earlier estimates of the Center for Data Analysis on the number of children who could qualify for the child tax credit.5  Table 1 contains estimates by congressional district of the number of children eligible in 1998. In summary,

  • The Center for Data Analysis estimates that the new credit benefits over 38 million children throughout the United States; and

  • Table 1 shows that 2.8 million children in Texas and 4.4 million children in California are eligible to benefit from the child tax credit.

The new credit targets every child under age 17 who is considered a dependent on a taxpayer?s return. In most cases, the credit is non-refundable, but some families with three or more children could be eligible for a refundable credit. The credit also targets low- and middle-income taxpayers and is phased out above an income threshold that is dependent on a parent?s tax filing status. The value of the credit declines by $50 for every $1,000 above the threshold. For tax year 1998, a taxpayer does not receive the credit if his income level is $8,000 over the threshold limit.

Rea S. Hederman is Research Analyst in the Center for Data Analysis.


The 1998 March Current Population Survey (CPS) produced by the Bureau of the Census is the primary source of data used for this report. CDA analysts employed several tests to determine eligible children and tax returns. First, children were considered eligible for the tax credit if they were under age 17. Second, a phase-out level was used to determine if the income of parents or guardians was above the maximum allowable threshold for receiving part of the child credit. Third, children were considered eligible for the child tax credit only if their family had federal tax liability after all other credits had been subtracted. Children of taxpayers who met all three criteria were considered eligible for the credit.

A special tabulation from the Bureau of the Census was used to determine the number of children in each congressional district under age 17 whose family income is not below the poverty level. These amounts were used to apportion the CPS state total by congressional district.

To see the full table from the Bureau of the Census, please click here for the PDF file.

1. This CDA Report updates information in "Comparing the Child-Tax Credit Plans for Congress and the Clinton Administration" by Scott A. Hodge.

2. The phase-out level of married taxpayers filing separately is $55,000. For additional details on the child tax credit, see Committee on the Budget of the United States Senate, Tax Expenditures: Compendium of Background Material on Individual Provisions, prepared by the Congressional Research Service (United States Senate: Committee Print S. Prt. 105?70, December 1998), pp. 391?393.

3. See Scott A. Hodge, " Balanced Budget Talking Points #5: Clinton?s $300-per-Child Tax Cut Plan Denies Tax Relief to 23 Million Children," Heritage Foundation F.Y.I. No. 78/95, December 11, 1995; and Scott A. Hodge, William W. Beach, John S. Barry, and Rea S. Hederman, " How Congress Can Deliver the Best Tax Cut Plan for the Money," Heritage Foundation Backgrounder No. 1122, June 11, 1997. See also Hodge, "Comparing the Child-Tax Credit Plans for Congress and the Clinton Administration," which provides estimates of eligible children by congressional district.

4. Jane Gravelle of the Congressional Research Service, however, published an intriguing essay on the relationship between tax law and families in 1998. See Gravelle, The Marriage Penalty and Other Family Tax Issues (Washington, DC: Library of Congress, Congressional Research Service, 1998).

5. Before a child tax credit can be claimed, the taxpayer must have a qualifying child. Qualifying children must meet all the criteria specified in the code as dependents of the taxpayer. Finally, the tax code recognizes children as tax entities for a number of credits, deductions, and exclusions.

About the Author

Rea S. Hederman, Jr. Director, Center for Data Analysis and Lazof Family Fellow
Center for Data Analysis