President Donald Trump is urging Republicans in Congress to pass a comprehensive legislative tax policy package, and your eligibility for certain family tax breaks could change.
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.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
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 or redrawn 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.
What’s happening to the Head of Household filing status
House Republicans aim to make the nearly doubled standard deduction created by the Tax Cuts and Jobs Act (TCJA) permanent. The provision, notably, would further increase the standard deduction by including an extra year of inflation adjustment.
Under the GOP’s proposal, 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, would not be eliminated.
For tax years 2025 through 2028, the standard deduction amount for those with a head of household filing status would increase by $1,500. According to estimates from the Joint Committee of Taxation, if this provision passes, it would increase the standard deduction amount in 2026 from $12,150 to $24,500.
Worth noting: A leaked GOP budget memo indicated that repealing the head of household filing status would result in $192 billion in savings over the next decade. The measure would have penalized single parents raising children or adults claiming a dependent on their own.
Parents need a Social Security number to claim the 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 under 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.
As reported by Kiplinger, Trump’s tax plan for the child tax credit would temporarily increase the credit amount to $2,500 through 2028. The credit would decrease to $2,000 for subsequent tax years. Additionally, the maximum refundable portion of the CTC wouldn’t exceed $1,400 per qualifying child (subject to inflation).
Require SSN for the American Opportunity Tax Credit
If you, your child, or your spouse expect to get some savings for pursuing a higher education, the requirements to claim this tax break are changing.
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.
Under current law, to qualify for the credit, you must submit a taxpayer identification number (TIN) or an adoption taxpayer identification number (ATIN). Under Trump’s tax proposal, the person applying for the AOTC must have a Social Security Number to be considered eligible for the tax break.
A released budget memo from Republican lawmakers showed that eliminating the AOTC would yield $59 billion in 10-year savings. So far, it seems like the credit will stick around if Trump’s legislative package is successful. However, its reach will be limited by the new requirement.
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:
- Eliminating or rewriting eligibility standards for certain education tax credits
- 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 this is developing news.
Related Content:
- Child Tax Credit: How Much Is It for 2024 and 2025?
- Should Tax on Tips Stay or Go Under Trump
- The Fine Print: What Trump Isn’t Telling You About His 2025 Tax Plans
-
The Most Popular Apps for Retirement Planning in 2025A J.D. Power survey ranks retirement planning apps based on customer service and satisfaction. Does your financial app make the cut?
-
Don't Disinherit Your Grandchildren: The Hidden Risks of Retirement Account Beneficiary FormsStandard retirement account beneficiary forms may not be flexible enough to ensure your money passes to family members according to your wishes. Naming a trust as the contingent beneficiary can help avoid these issues. Here's how.
-
The Final Countdown for Retirees with Investment IncomeRetirement Tax Don’t assume Social Security withholding is enough. Some retirement income may require a quarterly estimated tax payment by the September 15 deadline.
-
Standard Deduction 2025 Quiz: How Much Do You Really Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
New Bill Would End Taxes on Social Security Benefits in 2026: What Retirees Should KnowTax Law Congress could look to high earners to help offset lost revenue and possibly shore up the Social Security program.
-
IRS in Turmoil: GOP Budget Cuts and Staff Shake-Ups Threaten Taxpayer ServicesIRS Republican lawmakers advance a controversial budget bill that would gut IRS funding further, risking your 2026 tax filing season.
-
Cruise Lines Sue to Block Hawaii’s New Climate Tourism TaxState Tax Your vacation to the Aloha State could come at a higher price tag next year. Here’s why.
-
New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Age 65-PlusTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
Claiming the Standard Deduction? Here Are 10 Tax Breaks For Middle-Class Families in 2025Tax Breaks Working middle-income Americans won’t need to itemize to claim these tax deductions and credits — if you qualify.
-
Are Trump Tariffs Legal? Three Things to Know About the Supreme Court CaseTax Law The outcome of this legal battle about tariffs will hit your wallet in one way or another.
