House Passes Bill to Expand Child Tax Credit, Awaits Senate Approval
ICARO Media Group
The U.S. House of Representatives has recently approved the Tax Relief for American Families and Workers Act, a bill that aims to expand the child tax credit. The bill, introduced by Missouri Republican Representative Jason Smith and Senate Finance Chairman Ron Wyden from Oregon, is now awaiting review by the Senate.
Under the current child tax credit system, individuals can receive up to $2,000 per child, with only $1,600 being refundable. However, if passed, this new bill would gradually increase the maximum refundable amount per child over the next three years.
Starting in 2023, the maximum refundable amount would be raised to $1,800, allowing taxpayers to claim it when filing their taxes in 2024. The following year, in 2024, the maximum refundable amount would be further increased to $1,900. Finally, by tax year 2025, the maximum refundable amount per child would reach $2,000, with both amounts being adjusted for inflation.
While the year 2023 would see a nonrefundable remainder of $200, meaning it could only be used against owed taxes, the increased child tax credit could potentially be retroactively applied to 2023 taxes if the bill is passed by the Senate and signed into law by President Joe Biden.
It is estimated that approximately 16 million low-income children would benefit from the expanded child tax credit. However, some critics argue that the bill falls short of pandemic-era programs that provided monthly payments. In 2021, the child tax credit was temporarily increased to $3,600 per child under the age of six and $3,000 per child aged 6 to 17. These credits were fully refundable, with half of the amount distributed in monthly installments.
To qualify for the proposed expanded child tax credit, individuals must have a modified adjusted gross income of $200,000 or less, or $400,000 or less for couples filing jointly. The dependent for whom the credit is claimed must have been under the age of 17 on December 31, 2023, and must have a valid Social Security number. Additionally, the dependent must have lived with the filer for more than half of the year and received less than half of their financial support from their own sources.
While the bill awaits further review in the Senate, many are hopeful that the expansion of the child tax credit will provide much-needed financial assistance for families across the country.