Democrats want to extend monthly child tax credit payments until 2025

Democrats want to extend monthly child tax credit payments until 2025

Mint Images – Tim Robbins

As Democratic lawmakers on Capitol Hill scramble to take their new reconciliation bill to the last line, a proposal to expand the child tax credit could be changed.

The more generous child tax credit was authorized earlier this year by President Joe Biden and Congress to help provide additional financial relief to families in the wake of the COVID-19 pandemic.

It provided millions of families with direct monthly payments of up to $ 300 per child starting in July.

But the more generous child tax credit – totaling up to $ 3,600 per child – is only valid for this year.

House Democrats last week unveiled their proposal to keep the extended supply until 2025.

More from Personal Finance:
House Democrats’ tax plan would increase marriage penalties for wealthy couples
What a proposed paid family leave policy in the United States might look like
House Democrats propose to extend extended child tax credit until 2025

But in a recent interview, Senator Joe Manchin, DW.VA, said he would prefer the credit terms include some sort of work requirement for parents to receive it.

“Don’t you think that if we want to help children, people should make an effort? He said Sunday in an interview on CNN.

Democrats seek to push for change through a process known as reconciliation, which requires a simple majority vote in the Senate.

Shai Akbas, director of economic policy at the Bipartisan Policy Center, said: “Democrats need 100% support in their ranks to achieve reconciliation, so if Senator Munchkin thinks it is a priority, it is is a priority. Will be.”

How the factors work in the child tax credit

The extended child tax credit covers $ 3,600 per child under 6 and $ 3,000 per child 6 to 17 years old. Previously the credit was $ 2,000 per child under 17 and will be refunded if temporary changes are made for 2021. not extended.

With the expanded child tax credit, lawmakers also made direct monthly payments for the first time. Starting in July, families received payments of up to $ 300 per month for children under 6 and up to $ 250 per month for children aged 6 to 17.

These monthly payments are expected to continue until December. Families can claim the balance amount when they file their income tax return next year.

The most generous credit goes to families under certain income limits – $ 150,000 for married couples filing jointly and $ 112,500 for unmarried parents.

In addition, parents are not required to have a certain level of income before being eligible. Previously, the credit started gradually at $ 2,500 of earned income. Now parents can qualify even if their income is $ 0.

In addition, parents can now receive the full amount as a refund, up from the previous limit of $ 1,400.

How can lawmakers compromise

Senate Majority Leader Chuck Schumer (D-NY) speaks during a press conference on Families Supported by the Child Tax Credit on the U.S. Capitol July 20, 2021 in Washington, DC.

Win McNamee | Getty Images

The expansion of the child tax credit has been greeted with enthusiasm by advocates who say it has significantly reduced child poverty.

One thing that could stand in the way of approval for the proposed expansion is cost.

Munchkin also said he would not support the total price of $ 3.5 trillion.

Akabas said Democrats could compromise to lower the cost of the expanded child tax credit. He said this could include part of the fully refundable credit in the form of allowances payable monthly throughout the year, and another part that is close to the previous child tax credit structure which has been phased in at lower income levels, he said. It happens, he said.

The bipartisan political center has drafted its own proposal for how a further permanent extension of the child tax credit could work in coordination with changes to the earned income tax credit, which also serves as a program to fight against poverty.

Ultimately, there is a balance between providing universal support for families and encouraging labor market participation for those who struggle to meet their needs, Akbas said.

“This is how they will end up being the most prosperous financially,” Akbas said of participation in the labor market.

As Democrats negotiate a long list of priorities, it’s too early to say how the expanded child tax credit might end. Some Democrats oppose this being linked to income.

“It will be a debate that will take place in the coming weeks,” Akbas said.



Please enter your comment!
Please enter your name here