Congressional Agreement: Expanded Child Tax Credit and Its Beneficiaries

Congressional Agreement: Expanded Child Tax Credit and Its Beneficiaries
Image Credit: Reuters 

Advocacy for Child Tax Credit Expansion

Lawmakers are pushing for an expansion of the federal Child Tax Credit (CTC) in an effort to make the nearly three-decade-old benefit more accessible to U.S. families. Recently, leaders of congressional tax committees announced a deal to expand the CTC and extend certain business tax credits. While passage is not guaranteed, anti-poverty advocates view this agreement as a crucial step in addressing issues with the tax credit, which was designed to enhance families' economic security but has excluded many of the poorest children.

Impact of Expired Child Tax Credit Expansion

The proposed changes come more than two years after the expiration of the expanded Child Tax Credit, which increased the benefit to as much as $3,600 per child and distributed half of the tax benefit through six monthly checks in 2021. This initiative was credited with lifting millions of children out of poverty and supporting parents in covering expenses such as preschool, clothing, and other child-related costs.

Challenges Following the Expiry

Despite its popularity, the expanded tax credit expired in 2021, reverting in 2022 to its previous limit of $2,000 per child. This has significantly impacted many low-income families, particularly with rising food prices, high childcare costs, and the resumption of student loan payments.

Concerns from Advocacy Groups

Ailen Arreaza, the executive director of ParentsTogether Action, a national family advocacy group, expressed concerns, stating, "Between rising food prices, the high cost of child care, and the resumption of student loan payments, millions of parents are finding it harder than ever to make ends meet."

The New Agreement and Relief for Low-Income Families

The new agreement is seen as a crucial step in expanding the CTC for some of the lowest-income families, providing relief and support. The proposed changes include adjustments to eligibility criteria, making it easier for more families to qualify for the CTC and receive increased benefits in their annual tax refunds. These changes are expected to benefit around 16 million children from low-income families, with a significant percentage gaining substantial financial relief.

Future Adjustments and Implementation

While the deal does not include the return of the CTC's monthly payments, families with children under 17 can claim the CTC when filing their annual tax returns. If eligible, they can receive up to $1,800 added to their 2023 tax refund. The proposed adjustments are set to take effect in the 2024 tax year, aiming to address and rectify some of the limitations in the existing Child Tax Credit structure.

 


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