The House Settlement Act, also known as a large and beautiful bill, includes changes intended to help boost families’ finances.
These suggestions will help support eligible parents, including strengthening $1,000 investments in newborns, “Trump Account” and child tax credits up to $2,500.
The tax cuts proposed in the bill could provide wages of up to $13,300 for takeaways for the average family with two children, House Republicans estimate.
“What we’re trying to do is help hardworking Americans we’re trying to provide to our families,” says R-La. House Speaker Mike Johnson said in an interview with ABC News “This Week” on June 8th.
However, proposed changes highlighting job requirements could reduce the assistance of children in low-income families in terms of certain tax credits, health insurance and food aid.
According to a June 12 letter from the Congressional Budget Office, a minimum of one-tenth of the income distribution will lose about $1,600 a year from 2026 to 2034, or about 3.9% of its income from 2026 to 2034. The losses are primarily due to “reducing physical transfers.” This is noted in particular by Medicaid and Supplementary Nutrition Assistance Programs or SNAP, previously known as Food Stamps.
20 million children will not get a total $2,500 child tax credit
House Republicans have proposed increasing the maximum child tax credit to $2,500 per child. This is a change that starts with taxes in 2025 and expires after 2028.
Adam Ruben, director of the Advocacy Organization Economic Security Project Action, said the change would increase the number of low-income children who were blocked from the child tax credit because parents earn too low. Tax credits are not refundable. This means that if the filer has no tax, the filer cannot claim it.
Today, there are 17 million children who do not receive credit or partial credit because their family income is too low, Reuben said. Under House Republican plans, it would increase 3 million children. As a result, he said, 20 million children will be excluded from the child tax credit because families earn too little.
“We are increasing the credit of wealthy families while removing vulnerable families from credit,” Reuben said. “And that’s not a pro-family policy.”
Single parents of two children will need to make at least $40,000 to access the full child tax credit under the Republican plan, he said. Reuben says that meeting that threshold can be difficult for families earning minimum wages.
In contrast, the strengthening of child tax credits introduced under President Joe Biden means that very low-income families are eligible for the greatest benefits, according to Elaine Maag, a senior fellow at the Urban Blue Kings Tax Policy Center.
In 2021, the maximum child tax credit was $3,600 for children under the age of six and $3,000 for children aged 6-17. But shortly after its expiration, child poverty increased, she said.
The current House proposal also creates around 4.5 million children who are not eligible for the child tax credit, as they have at least one undocumented parent who will file taxes with their individual tax credit numbers, Reuben said. These children are currently eligible for child tax credit under the 2017 tax law, but will be excluded under the new proposal, he said.
New red tape for low income tax credits
House Republicans also want to require qualified pre-certification of income tax credits they earn, or EITCs targeting low-to-middle income individuals and families.
When similar requirements were tested about 20 years ago, it prevented some eligible families from benefiting, Maag said. New future management barriers could have the same outcomes, she said.
Food assistance for over 2 million children at risk
The House Republican lawmakers’ plans include a Supplementary Nutrition Assistance Program through 2034, or a roughly $300 billion reduction in the proposed cuts for SNAP.
SNAP now helps over 42 million people in low-income families buy groceries, according to Katieberg, a senior policy analyst at the Center for Budget and Policy Priorities. The children represent about 40% of the snap participants, she said.
The CBPP could potentially be seen as a massive reduction or completely over with more than 7 million people as a House Settlement Bill is proposed to be cut. In particular, the total includes over 2 million children.
“We’re talking about the deepest reductions to food aid that has never been seen before, if this bill could become law,” Berg said.
Under the House proposal, work requirements will apply to households with children for the first time, Bergh said. Parents with children over the age of 6 are subject to these rules. This limits people to receive food aid for just three months in three years, unless they work at least 20 hours a week.
Additionally, the House plan requires states to fund between 5% and 25% of SNAP food benefits. This is the first deviation from 100% federal funding for these benefits in the program’s history, Bergh said.
States that already pay to help manage snaps can face tough choices in the face of these higher costs. That includes reducing food aid and other state benefits, or eliminating SNAP entirely, Bergh said.
The bill does not directly propose cutting school lunch programs, but Bergh said it puts children’s qualifications at risk. Children who are eligible for SNAP are usually eligible for free or reduced school lunches. If families lose the benefits of SNAP, their children may miss those benefits too, Bergh said.
Health insurance losses have a negative impact on families
According to the Center on Budget and Policy Priorities, families with children may be responsive to federal spending cuts proposed by state Republicans, states may be reducing higher health costs and access to health care and reducing health care.
The House Republican bill seeks to cut spending by around $1 trillion on Medicaid, the Children’s Health Insurance Program and the Affordable Care Act market.
According to the CBPP, Medicaid work requirements are part of an extended group and can make low-income individuals vulnerable to losing their health insurance if they are unable to meet the requirements or document their eligibility for exemptions. Parents and pregnant women on the exemption list may lose compensation without proper documentation, according to the Institute for Nonpartisan Research and Policy Research.
According to the CBPP, eligible children may face barriers to access Medicaid and chip coverage if the law blocks rules that simplify enrollment in those programs.
Additionally, according to CBO estimates, an estimated 4.2 million individuals could be uninsured in 2034 if the enhanced premium tax credits that help individuals and families pay health insurance. Meanwhile, according to CBPP, those covered by marketplace plans will have to pay higher premiums. Without the premium tax credit, a family of four who earn $65,000 would pay $2,400 per year for market coverage.