Congress is contemplating an extension of the federal child tax credit (CTC), a potential initiative with the capacity to elevate approximately half a million children above the poverty threshold.
The bipartisan proposition for expanding the CTC involves raising the maximum credit per child to $2,000 from the current $1,600, and this adjustment would be in effect until 2025.
While this increment is modest compared to the credit expansion under the American Rescue Plan, which concluded at the close of 2021, the proposed extension holds the potential to significantly enhance the financial well-being of around 19 million children.
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Presently, these children receive either a partial credit or none at all due to their families’ income being below the qualifying threshold, according to findings from the Center on Budget and Policy Priorities (CBPP).
Revised Expanded Child Tax Credit
After persistent advocacy for a revised version of the expanded child tax credit, families may at last receive much-needed relief.
According to the proposal, the Center on Budget and Policy Priorities (CBPP) determined that, in the initial year of the credits, half of the 16 million children poised to benefit would be in families earning $630 or more.
Nearly 40% of these children would witness their households experiencing a financial boost of $1,000 or more, while approximately 25% would be in families realizing a gain exceeding $1,400 in that first year.
These advancements would be particularly noteworthy for low-income families with multiple children, constituting nearly three-quarters of all children.
Such families would witness a minimum gain of $1,000 or more in the inaugural year of the credit expansion.
As per the analysis, a parent earning $15,000 with a toddler and second grader would see the expanded child tax credit increase from $1,875 to $3,600 in the first year.
This translates to a substantial increase of $1,725.