Is the Family First Act Fiscally Responsible? It Depends. | American Enterprise Institute

This week, Rep. Blake Moore (R-UT), member of the House Committee on Ways and Means, introduced the Family First Act. This bill would significantly increase the Child Tax Credit (CTC), modify or eliminate other family tax provisions, and make the cap on the state and local tax deduction permanent. Rep. Moore and other supporters of this bill argue that it is fiscally responsible: The bill is “fully offset” and would not add to the budget deficit. However, that’s true only if Congress fails to extend the Tax Cuts and Jobs Act (TCJA). If the TCJA is extended, the bill would cost $800 billion over the next decade.

The centerpiece of the Family First Act is a large expansion of the CTC. The maximum credit would be increased to $3,000 per child under 18 ($4,200 for young children). The credit would phase-in starting with the first dollar of adjusted gross income (AGI) and increase proportionally with AGI up to $20,000. A smaller credit of $2,800 would be available to pregnant mothers. Both credits would begin to phase out at AGI over $200,000 ($400,000 for married couples filing jointly). The bill would cap the number of qualifying children at 6 and require that the tax filer and each qualifying child have a valid Social Security Number to qualify for the credit.

The bill also would scale back the Earned Income Tax Credit (EITC). The EITC would no longer vary based on parents’ number of children. It would phase in at 34 percent of earnings and max out at $4,300, before phasing out at earnings of $33,000. The credit for all eligible married filing jointly households would be up to $700 larger and the phase-out threshold $10,000 higher. The modest EITC for childless adults would remain but be modified.

The Head of Household filing status, which provides slightly more generous tax brackets and other parameters for single parents, would be repealed. The Child and Dependent Care Tax Credit (CDCTC) and the exemption for dependents would be repealed.

Finally, the bill would make permanent the existing $10,000 cap on the State and Local Tax Deduction (SALT).

Figures 1 and 2 illustrate the changes to the CTC and EITC for a married couple with two children. While parents with modest incomes would receive a somewhat smaller EITC, almost all parents would receive a much larger CTC.

Figure 1. Child Tax Credit for married couple with two children of various ages, 2026, assuming Tax Cuts and Jobs Act extended: current policy and Family First Act

Figure 2. Earned Income Tax Credit for married couple with two children, 2026, assuming Tax Cuts and Jobs Act extended: current policy and Family First Act

Whether these reforms are fiscally responsible depends on the budget baseline.

Under a current law baseline, in which the individual income tax provisions of the TCJA expire, this bill would decrease federal deficits. We estimate that the expansion of the CTC would, in isolation, increase the budget deficit by $2.1 trillion over the next decade. This would be more than offset by the $154 billion cut in the EITC, $629 billion from repealing the dependent exemption, $267 billion from repealing head of household filing status, $39 billion from repealing the CDCTC, and $1.6 trillion from the SALT cap. On net, it would raise $558 billion over the decade.

Under a current policy baseline, in which the TCJA provisions are assumed to be permanent, this expansion would end up increasing federal deficits by $794 billion over a decade. This baseline maintains the doubled CTC of $2,000 per child, no personal and dependent exemptions, and the $10,000 SALT cap. While this means the Family First Act’s CTC expansion costs much less ($1.3 trillion vs $2.1 trillion), two of its largest offsets (repeal of the dependent exemption and the $10,000 SALT cap) raise nothing.

Table 1. Budgetary Impact of the Family First Act, 2026-2035

The current law baseline is usually the proper way to measure the budgetary impact of policy. It shows how much changes to policy, as legislated, impact projected spending and revenues over the next decade. However, lawmakers are planning on extending the TCJA this year. Thus, it is important to understand how legislation would impact revenue relative to a current policy baseline under which the TCJA is assumed extended.

Simply extending the individual and estate tax provisions of the TCJA will reduce federal revenue by roughly $3.9 trillion over the next decade. Extending and canceling certain business tax provisions pushes the revenue loss to $4.8 trillion. The Family First Act would push the cost to roughly $5.6 trillion. Supporters of this bill would need to find $800 billion in offsets that are not already used in the TCJA extension to avoid further increasing its cost. Alternatively, they would need to spell out which provisions of the TCJA they would scale back by $800 billion.

Though costly overall, the TCJA made several improvements to the individual tax code and much of it is worth keeping. But with federal borrowing at record highs, lawmakers should find ways to reduce the cost of the bill, not increase it.