A new survey by Ramsey Solutions found that millennials and Gen Zers want the child tax credit (CTC) to be increased to $5,000. Some respondents claim this increase would have an impact on their decision to have children. For younger Americans facing high costs of living, student loan debt and stagnant wages, this kind of financial relief could help make parenthood feel more attainable.
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However, a bigger tax credit doesn’t just affect new or future parents; it could have ripple effects across generations. Here’s why younger generations are rethinking parenthood, and how it could impact your wallet. Also find out how you can qualify for the child tax credit.
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Why Millennials and Gen Z Are Rethinking Parenthood
According to the IRS, the (CTC) allows eligible taxpayers to reduce their federal income tax bill by up to $2,000 per qualifying child. Under the Tax Cuts and Jobs Act, the CTC is set to drop back to $1,000 after 2025 if Congress doesn’t take any action.
If passed, President Trump’s “One, Big, Beautiful Bill” would make the $2,000 credit permanent and raise the cap to $2,500 through 2028, after which the value would return to $2,000 and adjust for inflation.
There are no plans to increase the amount beyond these figures, but Ramsey Solution’s The State of Personal Finance report for the fourth quarter of 2024 found that 45% of millennial and Gen Z respondents say increasing the CTC from $2,000 to $5,000 per child would have a “significant or moderate impact” on whether or not they decide to have children.
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Millennials and Gen Zers have delayed parenthood due to financial pressures, including rising housing costs, childcare expenses and concerns about economic uncertainty.
The most recent report from the U.S. Department of Agriculture, based on 2015 data, estimated it costs over $233,000 to raise a child through age 17, not including college. Given inflation and rising living costs, the actual figure today is likely even higher.
According to a 2024 survey by Pew Research Center, six in 10 respondents said providing free child care would encourage more people to have children. Respondents also supported requiring employers to offer paid family leave, expanding tax credits and issuing monthly payments to parents of minor children.
How It Could Impact Other Generations
A larger child tax credit could offer relief to families raising kids, but that money has to come from somewhere. And the financial impact wouldn’t be limited to parents alone.
The Joint Committee on Taxation (JCT) estimates that a permanent expansion of the CTC with the added boost would cost $880 billion over the 10-year period. That kind of long-term spending raises questions about how the government would cover the cost, whether through higher taxes, increased borrowing or cuts to other federal programs.
For older generations, including Baby Boomers and Gen Xers who are no longer raising young children, some could see their tax burden increase or face reduced investment in programs they rely on, such as Medicare or Social Security.
Younger generations could also feel the impact. Since the expanded credit would not apply to them, they may still face higher taxes or reduced access to other federal services if offsets are needed to fund the program.
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This article originally appeared on GOBankingRates.com: Dave Ramsey: Millennials and Gen Zers Want the Child Tax Credit To Be $5K — How This Would Impact Your Wallet
