
A bipartisan proposal to extend the Child Tax Credit through 2025 has recently advanced through the House Ways and Means Committee. This legislation has cleared the House, and the Senate is expected to vote on it soon.
The proposal has garnered widespread support from a broad coalition of elected officials and community advocates, including pro-life and pro-family organizations. The U.S. Conference of Catholic Bishops praised the bipartisan efforts, commending Congress for fostering “renewed dialogue and commitment across party lines.”
If enacted, this legislation could immediately impact millions of families during the upcoming tax season, particularly benefiting over 36 million families with children, many of whom live at or near the poverty line.
Key Details
The American Rescue Plan Act of 2021 temporarily increased the Child Tax Credit for the 2021 tax year, raising it to $3,600 per child under six and $3,000 for children ages 6 to 17.
This expansion reached more than 36 million families, significantly reducing child poverty and enabling families to cover essential expenses like food, childcare, and housing.
In 2021, child poverty reached a historic low, but Congress’s failure to renew the expanded credit in 2022 led to a 41% surge in child poverty.
The proposed Child Tax Credit expansion for 2024 has bipartisan backing, uniting faith-based groups, community leaders, and progressive organizations to advocate for its passage.
Looking Ahead to Tax Season: Plan Early and Maximize Your Benefits
As families navigate high inflation and economic uncertainty, many are exploring available tax credits to ease financial burdens. Below, we’ve outlined several key credits to consider, starting with the impactful Child Tax Credit.
Child Tax Credit Updates
In 2021, the American Rescue Plan introduced a temporary expansion of the Child Tax Credit, raising the credit amount to $3,000 per child ($3,600 for children under six) and making it fully refundable. It also provided half of the credit as monthly payments from July to December of that year.
Unfortunately, the expanded credit expired at the end of 2021. Families now qualify for a maximum of $2,000 per child under 17, and the credit is only partially refundable. To claim it, families must complete Form 1040 and attach Schedule 8812.
Long-Term Impact of the 2021 Expansion
The temporary Child Tax Credit expansion had a transformative impact. Research shows it lifted millions of children out of poverty, with analysts emphasizing its unparalleled effectiveness in supporting families. During its implementation, food insecurity among households with children dropped dramatically, and families primarily used the funds to cover basic needs.
Efforts to Make the Expansion Permanent
Congressional leaders are working to make the expanded Child Tax Credit a permanent fixture. Representatives Rosa DeLauro, Suzan DelBene, and Ritchie Torres have reintroduced the American Family Act, which proposes extending the benefits of the American Rescue Plan’s Child Tax Credit.
In the Senate, lawmakers such as Sherrod Brown, Michael Bennet, and Raphael Warnock are championing similar initiatives, aiming to reintroduce the Working Families Tax Relief Act (WFTRA). A recent bipartisan compromise proposes expanding the credit through 2025, benefiting millions of low-income families.
If passed, the expansion would increase the credit to $3,000 for children aged 6-17 and $3,600 for children under six. The credit would remain fully refundable, and families could expect monthly payments, offering much-needed financial stability. This legislation is projected to support 65 million children nationwide.
Additional Tax Credits for Families
Child and Dependent Care Credit
Covers up to 35% of eligible childcare, summer camp, or dependent care expenses.
Maximum credit: $3,000 for one child or $6,000 for two or more children.
File Form 2441 to claim this credit.
Earned Income Tax Credit (EITC)
Designed for low- to moderate-income taxpayers.
The amount varies based on income and number of dependents.
Use the EITC Assistant to determine your eligibility.
Adoption Tax Credit
Offers up to $14,440 for qualifying adoption expenses.
Families earning under $223,410 qualify for the full credit. Submit Form 8839 to claim this benefit.
Inflation Reduction Act Tax Credits
Families may also qualify for additional tax credits under the Inflation Reduction Act. These credits aim to reduce household expenses and improve access to essential services.
As the legislative process unfolds, families should remain informed about potential changes to the Child Tax Credit and other financial relief programs. With careful planning and awareness of available benefits, families can maximize their tax savings and navigate challenging economic times more confidently.