The Act phases in an increase in the child tax credit to $1,000 from $500 per child.

* The Act sunsets.

The Act makes permanent a provision allowing the child credit to be used against the alternative minimum tax. It also repeals the alternative minimum tax offset of the refundable portion of the child credit.

Under prior law, the child credit is refundable only for families with three or more children. Beginning in 2001, the Act allows other families a refundable credit to the extent of 10% (15% for tax years beginning in 2005 to 2010) of earned income in excess of $10,000 (indexed for inflation beginning 2002). The refundable credit for families with three or more children remains available.

Other Provisions

Included in the Act are provisions that:

• Expand the adoption tax credit and adoption assistance programs
• Exempt refunds of the child tax credit from income for purposes of determining federal assistance program eligibility
• Increase the amount of expenses and the dollar limit for purposes of the dependent care credit
• Provide a credit for employer child-care assistance expenses