President Donald Trump is urging Republicans in Congress to pass a comprehensive legislative tax policy package, and family tax breaks are on the chopping block.
The measure aims to bundle Trump’s main policy goals into “one big, beautiful bill” and contains major policies including spending cuts, border security, and energy reforms. It would also address expiring tax breaks in the Tax Cuts and Jobs Act (TCJA), a law slated to sunset by the year-end.
A deficit of revenue to fund the mega-bill, which economists and policymakers argue benefits the wealthy, has caused GOP lawmakers to scramble and devise revenue plans including looking at radical tax cuts.
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Recently, a 50-page policy menu prepared by the House Budget Committee was obtained by Politico, listing a flood of tax policies at risk of getting gutted by the GOP.
The cuts collectively amount to over $5 trillion and include key family tax breaks, that help sustain low- to moderate-income families across the country.
Here are some tax breaks in danger of being reduced or gutted entirely.
Ending the Child and Dependent Care Credit
Affording quality child care or care for a loved one with a disability can be expensive, amounting to thousands of dollars each year for U.S. families.
The Child and Dependent Care Credit is a non-refundable tax break that helps cover caregiving expenses so that parents or guardians can continue working or search for employment. It’s also listed among the family tax credits that would be eliminated to shore up savings for Trump’s mega-bill.
Qualified taxpayers can claim 20% to 35% of work-related care expenses, up to a limit of $3,000 expenses for one child or dependent and up to $6,000 for two or more children or dependents.
That translates to a maximum credit worth of $1,050 for one child or dependent or $2,100 for two or more dependents or children.
According to the leaked policy reconciliation menu, eliminating the federal child and dependent care credit would yield $55 billion in savings over 10 years.
Eliminating Head of Household filing status
Another proposal in the list of Republican tax cuts would penalize single parents raising children or adults claiming a dependent on their own.
The provision aims to eliminate the “head-of-household” filing status, which offers lower tax rates and a higher standard deduction for unmarried taxpayers who have children or are caring for a loved one. To qualify for this filing status, taxpayers must meet the following criteria:
- The taxpayer pays more than half of the cost of maintaining a household, is considered unmarried, and is not claimed as someone else’s dependent.
- The taxpayer should also be able to claim a qualifying child or dependent on their tax return.
The provision to repeal the head of household filing status would result in $192 billion in savings over the next decade.
Notably, the Trump administration’s focus on marriage and birth rates has bled into the U.S. Department of Transportation (DOT). A memo circulated by new Secretary Sean Duffy indicated that DOT grants should “give preference to communities with marriage and birth rates higher than the national average.”
Require parent Social Security number for Child Tax Credit
Vice President JD Vance once floated the idea of expanding the federal Child Tax Credit during the 2024 campaign, but this provision seeks to reduce its reach substantially.
The federal child tax credit is a key tax break that provides qualifying households up to $2,000 per qualifying child under 17. As a partially refundable credit, if the CTC exceeds taxes owed, families may receive up to $1,700 per child as a refund for the 2024 tax year.
Unless Congress acts before the year-end, the child tax credit is set to revert to $1,000 per qualifying child in 2026. The age limit for qualifying children would also decrease to 16 due to expiring provisions from the TCJA.
According to the White House, before the page was temporarily unavailable by the new administration, the CTC was available to 40 million U.S. families each year.
That number is thanks to rules that currently allow taxpayers to claim the child tax credit as long as the child has a valid Social Security Number (SSN), even if the parent or guardian doesn’t have one.
The GOP proposal would require parents and children to have a Social Security Number to claim the CTC. This would yield $27.7 billion over the 10 years.
Eliminating the American Opportunity Tax Credit
If you, your child, or your spouse expect to get some savings for pursuing a higher education, think again.
The American Opportunity Tax Credit (AOTC) is a credit for qualified education expenses paid for an eligible student for the first four years of higher education. For 2024 (taxes typically filed in 2025) taxpayers get a maximum annual credit of $2,500 per eligible student.
Some qualifying expenses include tuition, required enrollment fees, or course materials such as books or supplies.
Scrapping the credit would yield $59 billion in 10-year savings.
Bottom line on GOP tax cuts
Family tax credits aren’t the only tax policies at risk of being eliminated or reformed under the GOP’s watch.
Republican lawmakers also singled out a laundry list of tax policies that they can potentially pull revenue from, including but not limited to:
- Moving federal employees to basic government pay and benefits
- Eliminating certain education tax credits
- Repealing the deduction for charitable contributions to health organizations
- Eliminating deduction of interest on student loans
- Capping SNAP maximum benefits
- Ending taxes on overtime
- Eliminating taxes on tips, and more
No matter the size of your household, some of these changes can impact you directly. So stay tuned for more information as the Trump administration kicks off its first 100 days.
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