New, expanded child tax credits are back — and they may actually pass Congress (2024)

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WASHINGTON — Congress, which has been setting records for a lack of accomplishments, may be on the verge of actually doing something big: passing a bill that could lift half a million kids out of poverty by next year.

The proposal, which the House could vote on as soon as next week, involves an expanded tax credit for parents of children 16 and younger.

If that rings a bell, congratulations, you’ve been paying attention. The proposed credit is a scaled-down version of a plan that passed during President Biden‘s first year in office but lasted only a year.


Reviving some version of that has been a top priority of congressional Democrats ever since.

Earlier this month, the chairs of Congress’ two tax-writing committees, Democratic Sen. Ron Wyden of Oregon and Republican Rep. Jason Smith of Missouri, struck a deal to make it happen.

Their proposal then won approval of the Republican-controlled House Ways and Means Committee, 40-3 — the sort of bipartisan vote that’s now rare in Washington.

This being Congress, it’s possible the deal could fall apart. Some House members threaten to oppose it over an unrelated tax issue. In the Senate, some conservative Republicans don’t like expanding the child tax credit on ideological grounds. But the lopsided vote in the House tax-writing committee indicated the bill has a strong chance of approval. That’s a rare advance in a stalemated Congress.


How the child credit cuts poverty

When the child tax credit first started, back in 1997, it was a small bonus that mainly helped middle-class families.

Taxpayers could take $400 off their income taxes for each child under 17. That helped families with decent incomes and several children, but did nothing for the large number of taxpayers who don’t owe any income tax — currently about 40% of households.

Starting in 2001, advocates for low-income families, led by Rep. Rosa DeLauro (D-Conn.), pushed through a change to allow families to get some of the money even if they don’t owe any taxes. That’s called refundability in tax jargon, and it’s key to making the tax credit work as an antipoverty measure.

Their argument was that if the federal government was going to use the tax code to boost families with children, it should focus on those most in need.

Over the last two decades, DeLauro and other Democrats, including former Speaker Nancy Pelosi and Sens. Michael Bennet of Colorado, Sherrod Brown of Ohio and Cory Booker of New Jersey, made expanding the credit a top party priority.

Step by step, they got provisions into each big tax bill that expanded the amount of the credit — now $2,000 per child — and the amount that could be refundable.



A short-lived triumph

In 2021, Democratic backers of expanding the tax credit won their biggest victory — a measure adopted as part of Biden’s COVID-19 recovery plan that boosted it to $3,000 per child, made it completely refundable and allowed the money to be paid out in monthly installments, rather than as a lump sum refund.

In effect, those moves converted the tax credit into a universal child allowance similar to benefits in Canada and many European countries. The plan was designed to cut child poverty in half, and in 2022, the number of kids in poverty fell to a modern low of 3.8 million, according to census figures.

But Democrats didn’t have the votes to keep the expanded credit going. Republicans denounced full refundability as a welfare giveaway and said it would allow poor people to stop working. When Sen. Joe Manchin (D-W. Va.) balked at making the plan permanent, it died after one year.

The next year, the Census Bureau estimates, the number of children in poverty spiked back up by roughly 5 million.

In some of those efforts, Democrats struck alliances with Republicans, including Sens. Marco Rubio of Florida and Mitt Romney of Utah, who have seen the tax credit as a pro-family measure.



The new plan

The deal cut by Wyden and Smith doesn’t go as far as the 2021 plan but would expand refundability to cover most families with at least some earnings. It would guarantee that those who do qualify get the full amount of the credit for each child, eliminating a cap in the current law.

And it would allow families to qualify by counting either their current income or their income from the previous year — a big help for parents, especially single mothers, who have unstable jobs.

Those changes would still leave out the poorest of the poor, those with no income, but it would help most of the roughly 17 million children who currently get less than the full benefit because their families don’t make enough money, according to the Tax Policy Center in Washington. Most of those families earn less than $40,000 a year.

California would have the largest number of kids who would benefit — nearly 2 million, according to an analysis by the Center for Budget and Policy Priorities, a liberal Washington group whose numbers are widely cited by both parties.

The new plan would lift about 400,000 children out of poverty in the first year and reduce poverty for an additional 3 million, according to the center’s analysis.


By 2025, when the plan would be fully phased in, it would move about half a million children out of poverty and reduce poverty for about 5 million others.


The deal

Smith and other Republicans signed on because Democrats agreed to back something the GOP wanted: renewal of three corporate tax breaks that are expiring. One allows companies to write off research and experimentation expenses, a second would restore full expensing for capital investments, and a third gives a larger deduction for interest expenses.

To pay for both the child credit and the corporate write-offs, the plan would phase out another tax provision — a COVID-19-era relief measure known as the employee retention tax credit. The IRS says that credit has become a source of widespread fraud and scams.

For Republicans in competitive districts, who increasingly fret that the lack of action in Congress gives them few accomplishments to run on, a tax deal that fulfills some business priorities could be attractive.

The deal would enact “pro-growth, pro-worker, pro-American” policies that will “help sharpen our competitive edge with China,” Smith said on Fox News.


The deal-making has been easier because the debate has been mostly out of the headlines.

Other issues, such as border policy and immigration, have slaked Congress’ demand for partisan point scoring, allowing tax writers to move ahead without too much partisan squabbling.


The opposition

Still, nothing’s easy in a closely divided Congress.

Some House Republicans who represent affluent districts in New York and New Jersey say they won’t back the plan unless House leaders agree to fully restore the IRS deduction for state and local taxes, which was slashed in the 2017 Trump tax bill — an issue that’s dear to upper-income taxpayers in high-tax states, including California.

Many conservatives object to letting families qualify by counting income from the previous year.

They say that gives an incentive for low-income parents to stop working. There’s not much evidence that actually happens — the tax credit isn’t enough to live on — but for many conservatives, limiting the tax credit to those who are working is a point of principle.

Finally, there’s the calendar: Congress is having trouble just getting annual budget bills passed to keep the government running.


Despite all that, there’s a decent chance Congress could send the tax measure to Biden for his signature before the April 15 tax-filing deadline, allowing families to take the expanded credit this year.

“Given today’s miserable political climate, it’s a big deal,” Wyden said in announcing the agreement earlier this month.

It’s also proof that bipartisan deal-making can still work in Washington, at least when the cameras are focused elsewhere.

I am an expert in U.S. congressional proceedings and taxation policies, with a deep understanding of legislative dynamics and tax-related measures. My expertise is grounded in a comprehensive knowledge of the historical context, key players, and intricacies of the topics at hand. I will demonstrate my expertise by providing detailed insights into the concepts mentioned in the article.

The article discusses a potential breakthrough in Congress – the passage of a bill aimed at lifting half a million children out of poverty by the following year. The proposed measure involves an expanded tax credit for parents of children aged 16 and younger. The article highlights the involvement of key figures such as Democratic Sen. Ron Wyden and Republican Rep. Jason Smith, who have reached a bipartisan deal to advance the bill.

  1. Child Tax Credit Evolution:

    • The article traces the history of the Child Tax Credit, which originated in 1997 as a small bonus for middle-class families.
    • It mentions the efforts led by Rep. Rosa DeLauro to make the credit refundable, a crucial aspect in transforming it into an effective anti-poverty measure.
  2. Recent Developments:

    • In 2021, Democrats secured a significant victory with a measure under President Biden's COVID-19 recovery plan, elevating the credit to $3,000 per child and making it fully refundable.
    • Despite success, the expanded credit faced opposition, with Republicans criticizing it as a welfare giveaway. The lack of votes for permanency led to a spike in child poverty the following year.
  3. New Proposal Details:

    • The current proposal, cut by Wyden and Smith, falls short of the 2021 plan but expands refundability for most families with some earnings.
    • It eliminates a cap in the current law, ensures full credit for each qualifying child, and allows flexibility in qualifying based on either current or previous year's income.
  4. Expected Impact:

    • The new plan is projected to benefit around 17 million children, particularly those in families earning less than $40,000 annually.
    • California is expected to have the largest number of benefiting children, and the plan could lift about 400,000 children out of poverty in the first year, with further reductions in subsequent years.
  5. Bipartisan Deal and Compromises:

    • The deal involves Republicans, including Jason Smith, supporting the proposal in exchange for Democrats' backing of corporate tax breaks.
    • To fund the child credit and corporate write-offs, the plan phases out the employee retention tax credit, which the IRS claims has become a source of fraud.
  6. Opposition and Challenges:

    • Some House Republicans, particularly from affluent districts, demand the full restoration of the IRS deduction for state and local taxes.
    • Conservative objections include concerns about letting families qualify by counting income from the previous year, alleging it might discourage work.

Despite challenges, there is optimism that Congress could pass the tax measure before the tax-filing deadline, showcasing a rare instance of bipartisan cooperation in a politically divided climate.

New, expanded child tax credits are back — and they may actually pass Congress (2024)


Did the new CTC bill pass in 2024? ›

The child tax credit (CTC) is a federal tax benefit that provides financial support for taxpayers with children. This year, the credit has been in and out of the news as lawmakers had hoped — but ultimately were unable — to expand the credit in time for the 2024 filing season.

Did the expanded Child Tax Credit pass? ›

At the beginning of 2024, the U.S. House of Representatives passed $78 billion tax legislation that includes a newly expanded child tax credit (CTC) and various tax breaks for businesses. Since then, the bipartisan tax package has been stalled in the U.S. Senate.

Did the bill pass for Child Tax Credit? ›

The Child Tax Credit expansion in the tax bill that passed by a strong bipartisan vote in the House last week would especially help children in rural areas.

What is the new CTC increase for April 2024? ›

Child Tax Credit Limit (as of 2023)

Until the Senate passes the 2024 proposed legislation, the maximum credit is $2,000 per qualifying child, with up to $1,600 being refundable, increasing to $1,700 in 2024. The refundable portion of the CTC phases is 15% for each dollar of income earned above $2,500.

Are we getting $3600 per child? ›

The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 per child for qualifying children under the age of 6 and to $3,000 per child for qualifying children ages 6 through 17.

What is the Child Tax Credit for 2024 payment schedule? ›

According to all that researchers know, the New Child Tax Credit payment is anticipated to be credited by October 30, 2024. This is to inform you that either you will receive a refund of taxes or the payment will be sent straight into your bank accounts.

Will tax credits end in 2024? ›

The 2024 to 2025 tax credits notices may show predicted payments for the tax year 2025 to 2026 - these are automatically generated and should be disregarded. Tax credits are ending on 5 April 2025 and are being replaced by Universal Credit.

Can you get a child tax credit if you have no income in 2024? ›

Note that taxpayers without at least $1 of earned income would not qualify for CalEITC.

Was the CTC approved in 2024? ›

In February, the House of Representatives approved an extension of the Child Tax Credit for 2024. However, the Senate has not yet voted on the measure. The Tax Relief for American Families and Workers Act continues to be stalled in Congress.

Who is eligible for $300 direct deposit payment 2024? ›

The $300 payment applies specifically to children under 6 years old. The payments are considered advance payments on your total Child Tax Credit for the year. You will reconcile the amount you received in advance payments when you file your 2024 tax return.

Can I get a tax refund if my only income is social security? ›

You would not be required to file a tax return. But you might want to file a return, because even though you are not required to pay taxes on your Social Security, you may be able to get a refund of any money withheld from your paycheck for taxes.

What president signed the Child Tax Credit? ›

The American Rescue Plan Act – which President Biden signed into law in 2021– included a revolutionary expansion of the existing Child Tax Credit (CTC). This new CTC – a provision my Ways and Means Committee colleagues and I helped craft –guaranteed monthly income for families nationwide through the end of 2021.

How did the Child Tax Credit get passed? ›

Historically, the federal child tax credit has had bipartisan support. It was established as a part of the 1997 Taxpayer Relief Act. Eligible recipients subtract the credit amount from their owed federal income taxes.

Is the government still doing Child Tax Credit? ›

Claim the Child Tax Credits Now

There are state and federal Child Tax Credits available for program recipients. The credits can help eligible program recipients with qualifying children receive a tax break and can assist with providing essential needs.

What is the new child tax credit for 2025? ›

The suggested increments are $1,800 for the 2023 tax year, $1,900 for the 2024 tax year, and $2,000 for the 2025 tax year.

What is the CTC direct deposit for 2024? ›

In 2024, the IRS will make a $300 direct deposit payout on the 15th of each month to those under six. Those aged six to seventeen will receive $250 every month.

When to expect tax refund in 2024? ›

If you filed your taxes online and your return is error-free, you can expect your refund within 21 days.

How to get $1400 a month from government? ›

$1,400 per-person checks

Single people making less than $75,000, heads of household making less than $112,500, and married couples filing jointly making less than $150,000 qualify for stimulus checks.

How to claim $3600 Child Tax Credit? ›

You can claim the Child Tax Credit by entering your children and other dependents on Form 1040, U.S. Individual Income Tax Return, and attaching a completed Schedule 8812, Credits for Qualifying Children and Other Dependents.

Are we getting monthly payments in 2024? ›

The CTC Stimulus Monthly Payments for 2024 continue to be a significant financial support for eligible families. In 2024, the Internal Revenue Service (IRS) will distribute these payments monthly, which is a departure from previous years when the credit was typically received as a tax refund.

What is the EITC credit for 2024? ›

The size of the Earned Income Tax Credit depends on your income, filing status, and number of dependent children. The more children you have, the larger the potential credit. In 2024, the maximum EITC ranges from $632 for someone with no children to $7,830 for a family with 3 or more dependent children.

Is the IRS giving 300 a month? ›

About the advance child tax credit

The payment will be up to $300 per month for each child under age 6 and up to $250 per month for each child age 6 through 17. The IRS will issue these payments by direct deposit if correct banking information has been provided to the IRS.

Why did I only get $500 for Child Tax Credit? ›

It sounds like you may have entered the child as an other dependent rather than a child. Other dependents age 18 or older would qualify for a $500 credit. Make sure the birth date is entered correctly. Go back through the dependent section and make sure you answered all the questions correctly.

What is the Tax Relief Act of 2024? ›

Key provisions in the Tax Relief for American Families and Workers Act of 2024. The bill provides for increases in the child tax credit, delays the requirement to deduct research and experimentation expenditures over a five-year period, extends 100% bonus depreciation through 2025, and increases the Code Sec.

Is the $300 direct deposit for child tax credit 2024? ›

The estimated payment schedule for the $300 CTC: First Payment: Likely to be in July 2024 (specific date may vary depending on IRS processing). Frequency: Subsequent payments are expected to be distributed on the 15th of each month following the initial payment.

What is the Earned Income Credit for 2024? ›

The earned income credit is a refundable tax credit for low- to middle-income workers. For tax returns filed in 2024, the tax credit ranges from $600 to $7,430, depending on tax filing status, income and number of children.

What is the Inflation Relief Act 2024? ›

Introduced in House (02/15/2024) This bill allows a refundable income tax credit for 10% of federal tax liability for a taxable year beginning in 2024. The credit is not available to taxpayers whose modified adjusted gross income exceeds $150,000 ($250,000 for joint tax returns) in any taxable year.

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