On the eve of the expanded Child Tax Credit going out to millions of families, a group of Democratic members of Congress want the enhanced tax break to become a permanent part of the Internal Revenue Code.
Under the American Rescue Plan Act (ARPA), the COVID relief measure that became law in March, the Child Tax Credit (CTC) was increased, for qualifying families, to $3,000 for each child between 6- and 17-years-old and to $3,600 for each child younger than 6.
The $7,200 in CTC this year for an eligible family with two children 5 or younger is $3,200 more than they would have received prior to the ARPA hike of the $2,000 per child tax credit.
In addition, the ARPA law makes the CTC fully refundable, meaning the taxpayers can get any excess credit that's not needed to eliminate a tax bill as a refund.
The changes, however, are just for the 2021 tax year.
Looking for permanence: The budget bill that the White House and the Senate Budget Committee just agreed to would extend the expanded ARPA child tax credit.
President Joe Biden, who campaigned on family-friendly tax breaks, has called for the monthly Advance Child Tax Credit payments going out tomorrow to be extended through the end of 2025.
But just how long and CTC in any form is extended depends on the dollars that the Budget Committee comes up with in drafting the final bill.
Child tax credit crew: Rep. Rosa DeLauro is one lawmaker pushing for a way to find money to make the expanded CTC permanent.
The Connecticut Democrat has introduced legislation to expand the CTC in every congressional session since 2003. She's now the defacto leader of what's known on Capitol Hill as the CTC six. All are Democrats and include DeLauro's House colleague Reps. Suzan DelBene of Washington and Ritchie Torres of New York, along with Sens. Michael Bennet of Colorado, Sherrod Brown of Ohio, and Cory Booker of New Jersey.
Another influential House member, Ways and Means Chairman Richard Neal (D-Massachusetts) isn't officially in the group (yet), but in late April he introduced the Building an Economy for Families Act.
It calls for permanently extension of not only the CTC, but also two other family- and low wage worker-friendly provisions that were enhanced, again only for 2021, by the ARPA — the Child and Dependent Care Credit (CDCC) and Earned Income Tax Credit (EITC).
In addition to keeping the current CTC changes, Neal's bill would make the following permanent, too:
- A fully refundable CDCC that provides up to $8,000 for qualifying child care expenses of up to $16,000, and
- The now triple maximum EITC benefit for workers without dependents.
Seeking public support: During a press conference today, the CTC Six touted the benefits of keeping the family tax break changes in place.
"It's the most progressive change to America's tax code ever. It's the single biggest blow to child poverty in American history," said Bennet.
"We have a real opportunity to not just throw money at a problem, but to…lift up all children and families," said DeLauro.
They have the Senate Finance Committee Chair Ron Wyden (D-Oregon), as well as Senate Majority Leader Chuck Schumer (D-New York) on their side. Both have pledged to extend the Child Tax Credit for, Schumer's words, "a very significant amount of time."
Stay tuned to find out exactly how that's measured in a divided Congress with a razor thin Democratic majority.
You also might find these items of interest:
- Parenting resources, including tax breaks, for single dads (and moms)
- The child care tax credit is a good claim on 2020 taxes, even better for 2021 returns
- Taxpayers now can go online to opt out of Advance Child Tax Credit payments, verify eligibility