Families Benefiting from Major Family and Education Tax Credits

and from their Expansion under the American Recovery and 

Reinvestment Act (ARRA)

Tax Year 2016

Office of Tax Analysis

July 23, 2015 

1
The first two tables show the number of families that benefit from or claim the key family and 

education tax credits for 2016 estimated using Treasury’s Individual Tax Model. The provisions 

examined are the earned income tax credit (EITC), the child credit and the additional child credit 

(CTC and ACTC respectively), the child and dependent care credit (CDCTC), the American 

opportunity tax credit (AOTC), and the lifetime learning credit (LLTC). 

Table 1 answers the question, “How many families benefit from the provision(s) and what is the 

total amount of benefit and the average benefit per return?” for the key family and education tax 

credits and their expansion under ARRA. The benefits are explored individually and in 

combination. 

 

Table 2 answers the question, “How many families claim the provision(s) and what is the total

amount claimed and average claimed per return?” for the key family and education tax credits. 

For any given provision, the amount of benefit in Table 1 is calculated by comparing estimated

tax liability to what estimated tax liability would be in absence of the provision. In some cases, 

the number of families thus benefiting from a credit and the amount of the benefit is less than the 

number claiming the credit and the amount of the credit. For example, the benefit to families 

from the AOTC is calculated by measuring the difference between estimated tax liability with 

the AOTC in place, and estimated tax liability if the AOTC were “repealed” and the Hope credit 

restored. In absence of the AOTC, some families would no longer be eligible for any education 

credit. However, other families would switch to the Hope credit or the LLTC and still receive a 

benefit; most families would receive a smaller credit, although a few families would receive a 

Hope credit of exactly the same size as their AOTC. The number of families that benefit and the 

amount of benefit estimated from the AOTC presented in Table 1 is therefore less than the 

number of families that claim the AOTC and the amount claimed presented in Table 2. In other 

cases, benefits will be much closer to claims.

Tables 3 to 6 present the estimated benefit from the expansion of the family credits in ARRA by 

adjusted gross income. The total benefit of the ARRA expansion of all family and education 

credits is shown in Table 3. The benefit from the EITC expansions is shown in Table 4. The 

benefit from the ACTC expansion is shown in Table 5. The benefit from the replacement of the 

Hope credit with the AOTC is shown in Table 6. 

2

U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015
Counts and Amounts of Families that benefit from the ...

Number of 

Families

Amount of 

Benefit

Average 

Benefit

(millions) ($billions) ($)

Family and Education Credits 55.6 144.6 2,601

(sum of EITC, CTC, ACTC, CDCTC, AOTC and LLTC)

Expansion of Family and Education Benefits under ARRA 24.4 24.6 1,010

(sum of EITC 3+ child and ARRA MPR, lower ACTC floor, AOTC)2

Family Credits (sum of EITC, CTC, ACTC and CDCTC) 47.4 124.1 2,620

Largest Family Credits (sum of EITC, CTC and ACTC) 46.0 120.7 2,623

Expansion of Family Benefits under ARRA 16.1 14.8 916

(EITC 3+ child and ARRA MPR, lower ACTC floor)

Earned Income Tax Credit (EITC) 27.8 66.3 2,380

Expansion of EITC under ARRA 6.4 3.4 537

(sum of EITC 3+ child and ARRA MPR)

Third Child Schedule in ARRA 3.2 2.0 633

Marriage Penalty Relief in ARRA 4.2 1.5 360

Total Marriage Penalty Relief (sum of ARRA & EGTRRA MPR)3 4.8 3.7 780

Child Tax Credit and Additional Child Tax Credit (CTC, ACTC) 35.2 54.4 1,547

Expansion of ACTC under ARRA (lower ACTC floor) 12.0 11.3 941

Total ACTC 19.8 27.1 1,364

Child and Dependent Care Tax Credit (CDCTC) 6.2 3.4 553

Education Credit (AOTC/Hope and LLTC) 13.4 20.4 1,516

American Opportunity Tax Credit (expand Hope credit to AOTC)4 9.5 9.9 1,042

Refundability of AOTC (allow 40% of AOTC to be refunded)5 5.3 4.3 814

Table 1

Estimated Benefit from Key Tax Credits for Families with Children and Education Expenses Totals

Tax Year 2016

 and Portion due to the American Recovery and Reinvestment Act1 

3

U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015
Notes:

5 Even though all 10 billion families claiming an AOTC claim the 40% of the credit that is refundable, only families 

with insufficient tax liability to offset their full credit benefit from this refundability. Families that have sufficient tax 

liability would receive their full credit even without refundability, and are therefore not included among the 5.3 

million families benefiting from refundability.

4 ARRA temporarily replaced the Hope credit with the more generous AOTC. The maximum AOTC is $2,500 

(compared to an estimated maximum Hope credit of $2,100 for 2016) and 40% of the otherwise allowable AOTC is 

refundable (the Hope credit is not refundable). ARRA also increased the beginning of the phase-out range to 

$80,000 (not indexed) from $56,000 (2016 indexed value). The phase-out ranges begin at $160,000 (AOTC) and 

$112,000 (Hope) for joint filers.

2 The 2016 estimated values of changes due to the ARRA are as follows: EITC MPR is increased from $3,360 to 

$5,590; ACTC earnings floor is reduced from $14,050 to $3,000; and, the education credit maximum is $2,500 for 

an AOTC under ARRA and $2,100 for a Hope credit without ARRA.

1 The tax benefits included in this table are the earned income tax credit (EITC), the child credit (CTC), the 

additional child tax credit (ACTC), the child and dependent care tax credit (CDCTC), the American opportunity tax 

credit (AOTC) and the lifetime learning credit (LLTC). The American Recovery and Reinvestment Act of 2009 

(ARRA) expanded the family credits in the following ways: the earnings floor for claiming the ACTC decreased to 

$3,000 (not indexed) from $10,000 (indexed); a fourth schedule was added to the EITC, expanding the credit for 

families with three or more children; EITC marriage penalty relief (MPR), that is, the increase in the phase-out 

threshold for married couples, was increased to $5,000 from $3,000 (both indexed); and, the Hope credit was 

temporarily replaced by the AOTC, which has higher phase-outs, is partially refundable, and is worth up to $2,500 

(not indexed). Although the ARRA expansions were initially effective for only two years, the American Taxpayer 

Relief Act of 2012 (ATRA) kept the changes in place through Tax Year 2017.

3 This line estimates the benefit of the full $5,000 of EITC MPR, which consists of the $3,000 first introduced in the 

Economic Growth and Tax Relief and Reconciliation Act (EGTRRA) of 2001 and an additional $2,000 expansion in 

ARRA. ATRA made the EGTRRA MPR permanent and extended the ARRA expansion through 2017. In 2016, 

estimated total MPR is $5,590.

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U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015
(millions) ($billions) ($)

Total EITC, CTC & ACTC, CDCTC and Education Credits 55.6 144.8 2,606

Total EITC 27.8 66.3 2,380

EITC for workers without children 7.3 2.2 299

EITC for workers with children 20.5 64.1 3,126

Total CTC and ACTC 35.2 54.5 1,547

CTC 22.6 27.4 1,212

ACTC 19.8 27.1 1,364

Total CDCTC 6.4 3.5 555

Total Education Credits 13.5 20.5 1,524

LLTC 3.7 2.5 671

Total AOTC2 10.0 18.1 1,809

AOTC nonrefundable portion 7.8 9.1 1,165

AOTC refundable portion 10.0 9.0 898

Notes:

Table 2

1 The tax benefits included in this table are the earned income tax credit (EITC), the child credit (CTC) and the 

additional child tax credit (ACTC) the child and dependent care tax credit (CDCTC), the American opportunity tax 

credit (ACTC) and the lifetime learning credit (LLTC).

2 As written in the statute, the AOTC is calculated in two pieces: 40% of the otherwise allowable AOTC is 

refundable and the remaining 60% is not refundable. Thus, all families claiming an AOTC receive the refundable 

portion of the AOTC but only those families with tax liability to offset are able to claim all or part of the 

nonrefundable portion of the AOTC. Of the 10 million families claiming an AOTC, 5.3 million would receive a 

smaller credit, or none at all, if the AOTC were not refundable.

 Number of Families and Amounts Claimed for Key Family Credits1

Number of 

Families

Amount 

Claimed

Average 

Tax Credit Claimed

Tax Year 2016

5

U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015
($) (thousands) ($millions) ($)

0 <= 15,000 7,496 7,432 991

15,000 <= 30,000 8,343 8,536 1,023

30,000 <= 40,000 2,501 2,006 802

40,000 <= 50,000 1,838 1,310 713

50,000 <= 60,000 718 501 697

60,000 <= 75,000 748 946 1,266

75,000 <= 100,000 926 786 848

100,000 <= 200,000 1,719 3,030 1,762

200,000 and over 0 0 0

Total2 24,410 24,649 1,010

Notes:

1 The ARRA temporarily replaced the Hope credit with the more generous AOTC. The maximum AOTC is 

$2,500 (compared to an estimated maximum Hope credit of $2,100 for 2016) and 40% of the otherwise 

allowable AOTC is refundable (the Hope credit is not refundable). ARRA increased the beginning of the phaseout range to $80,000 (not indexed) from $56,000 (2016 indexed value). The phase-out ranges begin at 

$160,000 (AOTC) and $112,000 (Hope) for joint filers. ARRA also increased the number of years a taxpayer 

can claim the credit to four years from two years. The ARRA expansions expire after 2017.

2 Families with negative income are excluded from the lowest income class but included in the total line. 

Table 3

Tax Year 2016

Adjusted Gross Income

Families Benefiting 

from ARRA expansion Total Benefit Average Benefit

Estimated Benefit from Expansion of the Earned Income Tax Credit (EITC), Additional Child Tax 

Credit (ACTC), and the Replacement of Hope Tax Credit with American Opportunity Tax Credit 

(AOTC) due to the American Recovery and Reinvestment Act (ARRA)

6

U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015
($) (thousands) ($millions) ($)

0 <= 15,000 947 403 425

15,000 <= 30,000 2,462 1,300 528

30,000 <= 40,000 1,552 918 592

40,000 <= 50,000 1,256 745 593

50,000 <= 60,000 115 39 337

60,000 <= 75,000 0 0 0

75,000 <= 100,000 0 0 0

100,000 <= 200,000 0 0 0

200,000 and over 0 0 0

Total2 6,365 3,417 537

Notes:

Table 4

2 Families with negative income are excluded from the lowest income class but included in the total line. 

(Additional Marriage Penalty Relief and Introduction of Third Child Schedule)1

1

The ARRA temporarily expanded the EITC by adding a more generous fourth schedule for families with three 

or more children and by increasing EITC marriage penalty relief from $3,000 (indexed) to $5,000 (indexed). 

The 2016 estimated values for the marriage penalty relief parameters are $3,360 and $5,590, respectively. The 

ARRA expansions expire after 2017.

Adjusted Gross Income Total Benefit Average Benefit

Families Benefiting 

from EITC Expansion

Tax Year 2016

Estimated Benefit from Expansion of the Earned Income Tax Credit (EITC) due to the

 American Recovery and Reinvestment Act (ARRA)

7

U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015
($) (thousands) ($millions) ($)

0 <= 15,000 5,636 5,264 934

15,000 <= 30,000 5,752 5,546 964

30,000 <= 40,000 473 373 789

40,000 <= 50,000 81 65 805

50,000 <= 60,000 25 22 864

60,000 <= 75,000 7 9 1,211

75,000 <= 100,000 6 4 673

100,000 <= 200,000 2 2 1,189

200,000 and over 0 0 0

Total2 12,039 11,332 941

Notes:

2 Families with negative income are excluded from the lowest income class but included in the total line. 

Table 5

(Decrease the Income Floor on Refundability to $3,000)1

1 The ARRA temporarily expanded the ACTC by decreasing the earnings floor for claiming the credit to $3,000 

(not indexed) from $10,000 (indexed). The 2016 estimated values for the pre-ARRA income floor is $14,050. 

The ARRA expansions expire after 2017.

Adjusted Gross Income

Families Benefiting 

from ACTC Expansion Total Benefit Average Benefit

Tax Year 2016

Estimated Benefit from Expansion of the Additional Child Tax Credit (ACTC) due to the

American Recovery and Reinvestment Act (ARRA)

8

U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015
($) (thousands) ($millions) ($)

0 <= 15,000 2.0 1,774 870

15,000 <= 30,000 1.9 1,684 874

30,000 <= 40,000 0.9 706 820

40,000 <= 50,000 0.7 479 730

50,000 <= 60,000 0.5 420 770

60,000 <= 75,000 0.7 939 1,263

75,000 <= 100,000 0.9 781 848

100,000 <= 200,000 1.7 3,028 1,763

200,000 and over 0.0 0 0

Total2

9.5 9,853 1,042

U.S. Department of the Treasury July 23, 2015

 Office of Tax Analysis

Notes:

2 Families with negative income are excluded from the lowest income class but included in the total line. 

Table 6

(Replacement of Hope Tax Credit with AOTC)1

1 The ARRA temporarily replaced the Hope credit with the more generous AOTC. The maximum AOTC is 

$2,500 (compared to an estimated maximum Hope credit of $2,100 for 2016) and 40% of the otherwise 

allowable AOTC is refundable (the Hope credit is not refundable). ARRA increased the beginning of the phaseout range to $80,000 (not indexed) from $56,000 (2016 indexed value). The phase-out ranges begin at 

$160,000 (AOTC) and $112,000 (Hope) for joint filers. ARRA also increased the number of years a taxpayer 

can claim the credit to four years from two years. The ARRA expansions expire after 2017.

Adjusted Gross Income

Families Benefiting 

from AOTC Expansion Total Benefit Average Benefit

Tax Year 2016

Estimated Benefit from Expansion of the American Opportunity Tax Credit (AOTC) due to the

 American Recovery and Reinvestment Act (ARRA)

9

U.S. Department of the Treasury

Office of Tax Analysis

July 23, 2015