A rally organized by the FatherTogether Foundation in support of the child tax credit portion of the Rebuild Better bill outside the US Capitol on December 13, 2021.
Sarah Silbiger / Bloomberg via Getty Images
Enhanced Child Tax Credit may expire in 2022, providing a smaller financial benefit to parents. But that haircut may not be the last – the value of the credit is expected to drop further in the next few years.
Democrats are still trying to win 50 votes in the Senate for President Joe Biden’s climate and social policy agenda, which would extend a temporary boost to the young tax credit I have one more year.
The Rescue America Plan, a pandemic relief act, raised the maximum value of the credit to $3,000 or $3,600 per child (depending on their age), from $2,000. la in 2021. It also converts the tax relief into a stream of monthly income that families begin to receive. July.
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The credit will be back to $2,000 next year if Congress doesn’t intervene. It’s ready to further reduction starting 2026, when the tax cut would be reduced to $1,000 per child due to the “sunset” provisions of the 2017 tax law passed by then-Republican-controlled Congress.
Of course, Congress wouldn’t necessarily let the tax credit go back to that $1,000 value.
“There’s a long history of the child tax credit being extended temporarily and when the term is due, it is renewed,” said Elaine Maag, a principal research associate at the Urban Tax Policy Center- Brookings, said told CNBC.
Maag, who specializes in income support programs for low-income families, said if the current law were to expire, low-income households would bear the brunt of the impact, while middle- and high-income earners will generally be limited to no impact.
The Better Rebuilding Act, which House Democrats passed in November, would expand the tax credit monthly income stream for parents earning less than $75,000 (single) or $150,000 (married) a year.
It will also make credit full refund on a perpetual basis – a specific benefit for low-income earners who will receive the full value of the credit regardless of their income or tax liability. Before the pandemic relief legislation, this wasn’t the case, and nearly all of the credit’s benefits went to middle-income households, Maag said. (The highest earners are not eligible.)
Democrats have hope to send law to Biden’s desk at the end of the year. The bill stalled in the Senate, where Joe Manchin, a conservative Democrat from West Virginia, still a debt on the $1.75 trillion proposal. The party needs all 50 Democratic votes in the Senate to be united by the Republican opposition.
An earlier version of the Democratic Party act, originally pegged at $3.5 trillion, would extend the value of the enhanced child tax credit to 2025 instead of 2022. scaled back the measure after objections over the cost from Manchin and Senator Kyrsten Sinema, D-Ariz.
https://www.cnbc.com/2021/12/16/why-a-cut-to-the-child-tax-credit-in-2022-may-not-be-the-last.html Why cutting the child tax credit in 2022 may not be the last