The House of Representatives on Saturday approved the $ 1.9 trillion Covid-19 relief package, which included a temporary increase in the tax credit for minors.
The House American Rescue Plan increases the tax credit for children from 2021 to $ 3,000 per child ages 6 to 17 and $ 3,600 annually for children under 6. The enhanced payments, which specifically cover 17-year-olds for the first time, would begin to gradually disappear during people earning more than $ 75,000 a year or $ 150,000 for married couples filing together.
There is already a child tax credit that provides $ 2,000 per child. When Americans file 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 married couples filing together) will gradually see the amount of their credit. If taxpayers ’credit exceeds the taxes they owe, they can get up to $ 1,400 as a refund.
The House bill passed Saturday would increase the amount of credit by $ 1,000 ($ 1,600 for those with children under 6) and allow taxpayers to receive the full amount as a refund for 2021. Families who are not eligible for the new $ 3,000 credit due to adjusted gross income could still claim the $ 2,000 credit per child. In addition, the plan would pay the credit in monthly installments of $ 250 and $ 300, respectively, instead of just once a year.
“The coronavirus pandemic not only shed light on child poverty, but exacerbated it and expanded the need and urgency to expand and improve children’s tax credit,” said Rep. Rosa DeLauro, D -Conn. statement. “For a long time, we knew this change would drastically reduce child poverty, with lasting benefits for children and their families.”
According to the Center for Law and Social Policy, changes to the American Rescue Plan’s child tax credit will reduce child poverty by about half. Poverty levels for black children are expected to fall by 52%, while Hispanic children will fall by 45%, according to CLASP. “If made permanent, these improvements will have positive multigenerational effects,” the organization said in a statement.
Under the new provision, the Treasury Department could issue advance payments of up to half of the 2021 child tax credit starting in July based on information from the 2019 or 2020 household tax returns. there is some overpayment of the credit, people earning less than $ 40,000 ($ 60,000 for couples filing jointly) should not return the amount or be reimbursed for salaries.
Several Democrats, led by DeLauro, supported a proposal that would make improved payments permanent, but the language did not make it the final version of House legislation.
In addition, Sen. Mitt Romney, R-Utah, proposed a similar tax credit last month that is slightly more generous for younger children (it provides up to $ 4,200 a year for children under 6) and lasts more than the proposed child loan as part of the $ 1.9 trillion relief package. However, to offset the cost of the increased tax credits, Romney’s plan proposes eliminating other family-focused programs and credits.
The version of the American Rescue Plan in the House will now reach the Senate, which is expected to vote on the package before March 14th.
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