The One Big Beautiful Bill Act (OBBA), signed into law on July 4, 2025, introduces significant changes to the tax code for families with children. Below is a summary of the key updates affecting the Child Tax Credit, new federal savings accounts for children, and the Other Dependent Credit.
Child Tax Credit
Previously: The Child Tax Credit (CTC) provided up to $2,000 per qualifying child, with $1,400 refundable. This was scheduled to revert to $1,000 after 2025 under the Tax Cuts and Jobs Act (TCJA), with income phaseouts beginning at $200,000 for single filers and $400,000 for joint filers.
Under OBBA: The CTC is now permanently increased to $2,200 per child, with the $1,400 refundable portion indexed for inflation beginning in 2026. The phaseout thresholds of $200,000/$400,000 are also made permanent
$1,000 “Trump Accounts” for Children
- Eligibility: Every child born between January 1, 2025, and December 31, 2029, will automatically receive a $1,000 one-time federal contribution into a Trump Account
- Investment Structure: The accounts are tax-deferred and will be invested in a stock index, allowing for compound growth over time
- Additional Contributions: Families, employers, and private donors may contribute up to $5,000 per year, adjusted for inflation
- Access to Funds: Funds may be used beginning at age 18 for education, skills training, starting a business, or purchasing a home
- Children Under 18 Born Before 2025: While the initial $1,000 contribution is limited to those born in the 2025–2029 window, children under age 18 born before 2025 may still be eligible to open a Trump Account and receive private contributions, though they will not receive the federal seed funding
These accounts are intended to support long-term financial goals such as education, homeownership, or retirement.
Other Dependent Credit
The $500 non-refundable credit for dependents who do not qualify for the Child Tax Credit—such as older children or elderly parents—has been made permanent under OBBA. The dependent must continue to be a U.S. resident, and the credit amount is not indexed for inflation.
