House Approves $80 Billion Deal to Enhance Child Tax Credit Program.
The House of Representatives has approved an $80 billion deal to enhance the federal child tax credit program. The proposed deal focuses on making the program accessible to low-income parents, with potential implementation as early as this year.
The agreement aims to make the child tax credit more generous and retain various business tax breaks supported by corporate America. This compromise stems from substantial bipartisan support for both provisions across party lines, with Republicans initially expanding the credit in the 2017 tax cut legislation.
The Child Tax Credit (CTC) was established in 1997 to provide financial assistance to eligible families with qualifying dependent children. The program has evolved over the years, with recent changes under the American Rescue Plan expanding the credit temporarily.
Most parents receive $2,000 per child under the child tax credit. If the new agreement is enacted, the credit will be indexed to inflation for the first time, potentially providing an additional $100 boost on tax returns in 2025.
While Biden’s 2021 stimulus plan temporarily increased the credit to $3,000 per child ($3,600 for children under six), it reverted to $2,000 at the end of that year. The proposed deal aims to extend the credit’s generosity, making it more accessible to low-income families who may not qualify for the total amount.
The eligibility criteria under the emerging deal would extend the tax credit to low-income families for every child, even if they don’t qualify for the total $2,000 per child. It means a significant increase for lower-income families, providing essential financial support.
Despite these changes, some limitations remain. Families with two kids may only benefit if they earn less than $40,000 per year, and those with three may only help if they make roughly $70,000 annually.
Most families receive automatic monthly payments of $250 or $300 per child. To qualify, the child must be under 17 and meet specific criteria, and the family’s annual income should be under $200,000 for full credit eligibility.
The proposed bill aims to expand the CTC further, emphasizing a per-child basis calculation based on earned income exceeding $2,500. As the program evolves, staying informed about eligibility and potential changes is crucial for eligible families to maximize the support provided by the Child Tax Credit.
The proposed deal has received praise from both sides of the aisle, with lawmakers applauding the program’s potential to provide much-needed support to struggling families. The enhanced credit could significantly reduce child poverty and increase financial stability for families nationwide.
The deal now moves on to the Senate, where it will be debated and potentially revised before being signed into law by the President.
