U.S. Lawmakers Announce Deal to Boost Child Tax Credit

WASHINGTON, D.C. — Today, a bipartisan group of lawmakers announced a deal to expand the Child Tax Credit. 

The Child Tax Credit was originally expanded in 2021 as part of the American Rescue Plan to help families during the pandemic. During the expanded relief, child poverty rates fell to the lowest levels on record. The rates increased once the temporary expansion expired. 

In recent months, Democrats in Washington have advocated for a Child Tax Credit expansion, similar to 2021.  

The COVID-era expansion boosted payments from $2,000 to $3,000 per child for children over the age of six and from $2,000 to $3,600 for children under the age of six. It raised the age limit from 16 to 17 and families were eligible for full credit if they made less than $150,000 for a couple or $112,500 for a family with a single parent. 

The $78 million agreement announced Tuesday would increase the maximum refundable tax break from $1,600 to $1,800 per child for 2023. The limit would increase to $1,900 for tax year 2024, and $2,000 for 2025. It would also adjust the tax credit for inflation starting in 2024, give families the choice of using their earnings in the current year or the prior year and provide tax breaks for businesses. 

Though it’s not as large of an expansion as 2021, advocates say it would still help thousands of working-class families and their children. 

“I would certainly be able to make great use of an expanded child tax credit,” said Cassie Williams, a mother of two living in the Detroit, MI metro area. “Still have a lot of out-of-pocket costs to pay for these kids and our grocery bills are about 50 percent higher than they were four or five years ago,” she added. 

Williams says the expanded tax credit in 2021 provided stability during an uncertain time. But once the temporary expansion expired, thousands of families, including Williams’, were cut because they did not meet necessary income requirements. 

“We were really worried for a few months there,” said Williams. 

Without the payments, her whole family felt the impact. 

“Financial stress also bleeds into your children’s lives, too. We’re more stressed out parents and it makes it harder to be the parent you want to be when you’re stressing over money,” said Williams. 

According to the U.S. Census Bureau, under its expansion, the Child Tax Credit lifted over two million children out of poverty and resulted in a child poverty rate of 5.2 percent in 2021, the lowest in U.S. history. 

“It decreased child poverty in half,” said Ailen Arreaza, the executive director at ParentsTogether. “It included a lot more families and the amount was expanded and families were able to get monthly checks as part of the expanded child tax credit,” she added. 

If today’s deal ultimately becomes law, Arreaza says it can lift 400,000 children out of poverty. 

“This agreement takes a crucial first step in doing just that by expanding the CTC for some of the lowest income families,” said Arreaza. 

However, Arreaza would have liked to see the deal include expansions similar to 2021. She says more needs to be done for families like Williams’, whose income is right around the eligibility cut off. 

“While these improvements will make a meaningful difference in the lives of millions of families, they do not go far enough,” said Arreaza. “Between rising food prices, the high cost of childcare, and the resumption of student loan payments, millions of parents are finding it harder than ever to make ends meet. These families, who often don’t meet the income requirements to receive the full Child Tax Credit, must be prioritized in the program’s expansion.” 

The deal needs to be written into legislation and would have to pass the Republican-controlled House and Democratic Senate. Some are hoping to get it done quickly, before Americans file their taxes this year.