The federal child tax credit is being enhanced this year to lift millions of children out of poverty. The expansion of the credit comes as part of the American Rescue Plan, which is meant to aid pandemic recovery.
Families with children can now start receiving monthly payments for $300 or more as part of President Joe Biden’s $1.9 trillion relief package.
The one-year expansion of the federal child tax credit makes it more widely available by increasing the amount of credit and rolling it out in periodic payments.
Unlike the current child tax credit, the new credit is also fully refundable. That means more low-income families can benefit because parents do not have to owe money in taxes to be eligible for the credit.
Eligible parents can now receive $3,600 per child under six and $3,000 for children under 18 for the remainder of the year. Previously, the credit was $2000 per child under 17.
“The child tax credit is very big news. It’s big news that goes beyond the vehicle that got it done, which is the American Rescue Plan,” Price said. “This one-year expansion of the child tax credit promises to lift some incredible percentage of America’s children out of poverty.”
Some estimates have put that percentage at more than 40 percent. According to the Center on Budget and Policy Priorities, even short-term expansion of the credit could put 4.1 million children above the poverty line.
Price said he hopes the new format of the credit will become permanent, citing the benefits the program will have on lower income children.
“There is talk, and there needs to be talk, about extending it,” Price said. “It is one year, it is part of the American Rescue Plan, so it is keyed to pandemic recovery. But this is long, long overdue.”
Making the credit expansion permanent is part of the American Families Plan, which is part of the President’s goal to reinvest in American families. Under the plan, the 2021 credit would be extended to 2025 and become permanently fully refundable.
Price said, however, it is unlikely that most of the policies outlined in the American Families Plan will receive any Republican support.
Single filers making up to $75,000 per year and joint filers making up to $150,000 per year are now eligible for the expanded credit.
For more information of and to check your eligibility click here.
Featured photo via the Town of Chapel Hill
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