The House of Representatives approved the $ 1.9 trillion Covid-19 aid package on Saturday, which included a temporary increase in the child tax credit.
House’s American Rescue Plan increases the child tax credit for 2021 to $ 3,000 per child ages 6 to 17 and $ 3,600 annually for children under 6. Enhanced payments, which specifically cover 17-year-olds for the first time, would begin to decline for individuals earning more than $ 75,000 a year or $ 150,000 for married couples filing joint actions.
There is already a child tax credit in place that provides $ 2,000 per child. When Americans declare their taxes, they can claim credit for children under 17. Current credit is based on income, so those earning more than $ 200,000 ($ 400,000 for couples who jointly cash in) will see their credit amount gradually phased out. If taxpayers’ credit exceeds taxes due, they can get up to $ 1,400 in reimbursement.
The House bill approved on Saturday would increase the credit amount by $ 1,000 ($ 1,600 for those with children under 6) and allow taxpayers to receive the full amount as a refund by 2021. Families who do not qualify for the new credit of $ 3,000 due to higher adjusted gross earnings would still be able to claim the $ 2,000 credit per child. In addition, the plan would make the credit payable in monthly installments of $ 250 and $ 300, respectively, instead of just once a year.
“The coronavirus pandemic has not only illuminated child poverty, but has exacerbated it and expanded the need – and the urgency – to expand and improve child tax credit,” said Representative Rosa DeLauro, D-Conn., In a demonstration. “We have known for a long time that this change would dramatically reduce child poverty, with lasting benefits for children and their families.”
The American Rescue Plan’s changes in child tax credit will reduce child poverty by about half, according to the Center for Law and Social Policy. Poverty levels among black children are expected to drop 52%, while among Hispanic children they will drop 45%, according to CLASP. “If they are permanent, these improvements will have positive effects over several generations,” the organization said in a statement.
Under the new provision, the Treasury Department can issue prepayments of up to half of the 2021 child tax credit starting in July, based on households’ 2019 or 2020 tax return information. If there is any overpayment of the credit, individuals earning less than $ 40,000 ($ 60,000 for couples taking action together) will not need to refund the amount, nor will they be provided with salaries.
Several Democrats, led by DeLauro, supported a proposal that would make increased payments permanent, but the language did not reach the final version of the House’s legislation.
In addition, Senator Mitt Romney, R-Utah, proposed a similar tax credit last month that is slightly more generous for younger children (offers up to $ 4,200 a year for children under 6) and lasts longer than the child credit proposed as part of the $ 1.9 trillion aid package. However, to offset the cost of increasing tax credits, Romney’s plan proposes to eliminate a number of other family-oriented programs and credits.
The House version of the American Rescue Plan will now go to the Senate, which is expected to vote on the package before March 14.
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