Child Tax Credit
Latest News on Child Tax Credit
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A bipartisan bill that would extend the Child Tax Credit through 2025 has passed through the House Ways and Means Committee and the full House. The House vote was 357 to 70 with 188 Democrats and 169 Republicans voting in favor of the bill. A vote in the Senate is expected to happen shortly.
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Broad support from a diverse coalition of elected and community leaders, including pro-life and pro-family advocates, are supporting this bipartisan bill. US Conference of Catholic Bishops thank members of Congress for “renewed conversation and commitment on both sides of the aisle” in this effort.
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Proposal could immediately affect millions of families filing their 2023 taxes. Over 36 million American families will benefit with greatest impact to children living below or near the poverty line.
Key Facts
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The American Rescue Plan Act of 2021 temporarily expanded the child tax credit for the 2021 tax year to $3,600 per child younger than age 6 and $3,000 per child up to age 17.
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The expanded child tax credit reached over 61 million children in more than 36 million households, and funds were primarily used for child care, food, housing and other basic needs.
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In 2021 child poverty fell to its lowest level ever in America.
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In 2022 Congress did not renew CTC expansion, child poverty surged by 41%.
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Expansion of Child Tax Credit before Congress in 2024 has bipartisan support. A broad coalition of conservative and pro-life faith and community leaders and progressive community based organizations have come together to support the bill.
What is the Child Tax Credit?
Originally passed in 1997, the Child Tax Credit (CTC) was created to provide families with children relief in their federal income tax liability. In 2021, the American Rescue Plan Act made several significant changes to the CTC, including increases in the amount per child and making it fully refundable. This resulted in expansion of eligibility for families with little or no income tax liability.
As noted in a June 2023 piece on Government Accountabilty Project, the expansion of the CTC had an immediate impact, driving childhood poverty down to a record low. Despite the success of the CTC expansion, in 2022 partisan opposition caused the expansion to expire and revert back to the lower and less inclusive benefit.
Current Proposal to Expand
The primary focus of the bill is to expand the Child Tax Credit, especially for lower-income families. If enacted, this legislation would provide much-needed financial support to struggling households.
Key provisions include:
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Increasing the maximum refundable credit for working parents in households with minimal or no income tax liability.
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Granting low-income families with multiple children the same credit for each child, aligning with the existing benefits available to higher-income families.
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Offering families the flexibility to choose whether to use their earnings from the current year or the prior year, accommodating income fluctuations.
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Implementing adjustments for inflation, starting in 2024, to ensure that the credit remains responsive to economic changes.
What would Permanent Expansion of CTC mean?
The proposed expansion of the Child Tax Credit has the potential to benefit a substantial portion of the American population. An estimated 36 million American families, encompassing 61 million children, stand to gain from this legislation.
The primary beneficiaries are expected to be children living below or near the poverty line, with approximately 500,000 military families also impacted positively.
Why this matters?
The bipartisan Child Tax Credit bill represents a crucial step toward providing financial relief to American families, particularly those in lower-income brackets. By increasing the credit amount, expanding eligibility, and incorporating inflation adjustments, this legislation seeks to ensure that the Child Tax Credit remains an effective tool for addressing the needs of struggling families.
Additionally, the broad support from diverse stakeholders demonstrates the capacity we have in this country to rise above partisan politics and divisive rhetoric and put America’s families first.