Latest News on Child Tax Credit
A bipartisan bill that would extend the Child Tax Credit through 2025 has passed through the House Ways and Means Committee. The bill has passed the House and a vote in the Senate is expected soon.
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.
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
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.
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.
In 2021 child poverty fell to its lowest level ever in America.
In 2022 Congress did not renew CTC expansion, child poverty surged by 41%.
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.
With high inflation in recent years, Americans nationwide have relied on tax credits to ease their financial burden. One example is the child tax credit, which has helped countless American families.
Child Tax Credit Expansion Lifted Millions of Children Out of Poverty
In 2021, President Biden signed the American Rescue Plan into law, which included the One-Year Child Tax Credit Expansion, which raised the child tax credit to $3,000 per child ($3,600 for children under age 6). Additionally, this vastly beneficial program made the tax credit fully refundable for families residing in the U.S. for more than six months during 2021, eliminating the $2,500 earnings floor that had previously existed. To provide immediate support,
the IRS also sent monthly payments to eligible families from July to December 2021.
The impacts of the expansion were widespread, driving the child poverty rate to a record low of 5.2%, keeping roughly 2.1 million American children above the poverty line and making a brighter future for children across the country.
Valuable Child Tax Credit Expansion Left to Expire
Despite the massive benefits seen from just one year of the child tax credit expansion, opposition from Republicans and Senator Manchin allowed the expansion to expire at the end of 2021. Now, American families only can receive up to $2,000 per child under 17 years old, and it is only partially refundable, meaning that if the credit exceeds the amount of taxes you owe, you can receive a refund for the difference, rather than a full refund.
Lawmakers Push for Long-Term Child Tax Credit Expansion
Thankfully, there are some members of Congress now revisiting the child tax credit expansion. Representatives Rosa DeLauro, Suzan DelBene, and Ritchie Torres have reintroduced the American Family Act, which proposes the child tax credit expansion under the American Rescue Plan be made permanent.
A group of Senators including Sherrod Brown, Cory Booker, Michael Bennet, Ron Wyden, and Raphael Warnock are anticipated to propose a similar bill, reintroducing the Working Families Tax Relief Act (WFTRA). Like the American Family Act, this bill aims to establish the permanence of the Child Tax Credit expansion implemented under the American Rescue Plan. A recent compromise would bring back an expanded Child Tax Credit through 2025, benefitting fifteen million children from low-income families. This bipartisan bill showcases what’s possible when our legislature works in tandem.
The framework of this deal was made possible by a bipartisan coalition of pro-life and pro-family advocates and elected leaders, including the National Association of Evangelicals, United States Conference of Catholic Bishops, American Enterprise Institute, and the National Hispanic Christian Leadership Conference, among many others. In display of bipartisanship, the Child Tax Credit expansion passed the House 357-70. The bill now awaits a vote in the Senate.
Studies Prove Expanded Child Tax Credit a Game-Changer for Child Well-being
According to a study carried out by the Urban Institute, if Biden’s child tax credit modifications are made permanent, it would result in a reduction of child poverty by more than 40%, bringing benefits to over 4.3 million children. Numerous tax economists argue that the American Rescue Plan Act has had a greater influence on safeguarding our children than the majority of previous policies implemented over the past 50 years, effectively protecting lives throughout the entire nation. With these proven benefits, it only makes sense to bring back the expanded child tax credit to boost millions of Americans out of poverty.
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