Parents are set to get their last monthly infusion of the expanded child tax credit starting Wednesday — unless Congress acts to extend it for another year.
Eligible families have received monthly payments of up to $300 per child since July as part of the Democrats’ $1.9 trillion coronavirus relief bill, which President Joe Biden signed in March. But the beefed-up credit is only in effect for 2021.
Democratic leaders want to extend the monthly payments for certain families for another year as part of the party’s $1.9 trillion spending bill. But the legislation faces opposition from West Virginia Sen. Joe Manchin, a Democrat, who is concerned about the cost of the sweeping safety net enhancements.
It’s unclear whether the legislation, which the House passed last month, will get through the Senate in the next few weeks, if at all. The Internal Revenue Service has advised that Congress should pass the package by December 28 to ensure the mid-January payments can be distributed on time, Oregon Sen. Ron Wyden, chair of the Senate Finance Committee, told reporters last week.
Even if the bill is approved, fewer families will receive monthly infusions of the expanded credit in 2022. Under the latest iteration of the spending package, only joint filers earning less than $150,000 and heads of households making less than $112,500 will get them.
More than $15 billion was sent to the families of roughly 61 million children last month, the Treasury Department and IRS said. Eligible households have received a total of roughly $77 billion since the first monthly payment in July.
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Democratic leaders want to extend the monthly payments for certain families for another year as part of the party's $1.9 trillion spending bill.
Child tax credit enhancement
Most parents have automatically received up to $300 for each child up to age 6 and $250 for each one ages 6 through 17 on a monthly basis, which accounts for half of the enhanced credit. Families will receive the other half when they submit their 2021 tax return next season.
In total, the expanded credit provides up to $3,600 for each younger child and up to $3,000 for each older one.
The full credit is available for heads of households earning up to $112,500 a year and joint filers making up to $150,000, after which it begins to phase out. For many families, the credit then plateaus at $2,000 per child and starts to phase out for single parents earning more than $200,000 or for married couples with incomes above $400,000.
Prior to this year, the standard child tax credit was up to $2,000 for each child up to age 17, and parents claimed it annually on their tax returns.
Also, as part of the credit’s enhancement, more low-income parents became eligible for the full amount because lawmakers made it fully refundable. It had been only partially refundable — leaving more than 26 million children unable to get the entire credit because their families’ incomes were too low, according to Treasury Department estimates.
Helping struggling families
Parents have been using the monthly infusions to pay for food, clothing, utilities, school books and supplies, according to an Urban Institute analysis of Census Bureau data from mid-July to mid-September.
It has also helped reduce child poverty, which Biden and congressional Democrats have repeatedly touted.
The October payment kept 3.6 million children from poverty, according to Columbia University’s Center on Poverty and Social Policy. It contributed to a 28% reduction in child poverty compared with what the rate would have been.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP
WASHINGTON (AP) — President Joe Biden's now- $1.85 trillion plan to boost social and education programs as well as protect against global warming continues to be fine-tuned by Democrats in Congress with a new goal of completing work before Thanksgiving.
The updated plan includes universal preschool, funding to limit child care costs and a one-year continuation of a child tax credit that was expanded earlier this year and applied to more families. But Democrats are scaling back some investments and shortening the timeframe for funding to whittle down spending. Some proposals have been dropped entirely.
The House is working to pass the legislation soon, but it will still have to clear the Senate, where revisions are likely.
The framework fits an approximately $1.85 trillion budget over 10 years, rather than the $3.5 trillion budget plan originally envisioned.
Here's what's in the package, based on summaries provided by the White House and the House.
AP
WASHINGTON (AP) — President Joe Biden's now- $1.85 trillion plan to boost social and education programs as well as protect against global warming continues to be fine-tuned by Democrats in Congress with a new goal of completing work before Thanksgiving.
The updated plan includes universal preschool, funding to limit child care costs and a one-year continuation of a child tax credit that was expanded earlier this year and applied to more families. But Democrats are scaling back some investments and shortening the timeframe for funding to whittle down spending. Some proposals have been dropped entirely.
The House is working to pass the legislation soon, but it will still have to clear the Senate, where revisions are likely.
The framework fits an approximately $1.85 trillion budget over 10 years, rather than the $3.5 trillion budget plan originally envisioned.
Here's what's in the package, based on summaries provided by the White House and the House.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- An expanded child tax credit would continue for another year. As part of a COVID relief bill, Democrats increased the tax credit to $3,000 per child ages 6-17 and $3,600 per child 5 and under. Households earning up to $150,000 per year get the credit paid to them on a monthly basis. Budget hawks worry that a one-year extension is a budgetary tool that will lower the cost of the program on paper, but mask its true costs since lawmakers tend to continue programs rather than let them expire.
- The expanded Earned Income Tax Credit that goes to 17 million childless, low-wage workers would continue for one year.
AP file
- An expanded child tax credit would continue for another year. As part of a COVID relief bill, Democrats increased the tax credit to $3,000 per child ages 6-17 and $3,600 per child 5 and under. Households earning up to $150,000 per year get the credit paid to them on a monthly basis. Budget hawks worry that a one-year extension is a budgetary tool that will lower the cost of the program on paper, but mask its true costs since lawmakers tend to continue programs rather than let them expire.
- The expanded Earned Income Tax Credit that goes to 17 million childless, low-wage workers would continue for one year.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- Universal prekindergarten would be established for all 3- and 4-year-olds and child-care subsidies would be provided for poorer and middle-income Americans. But the programs are funded only for six years.
- $40 billion would be provided for higher education and workforce development. This includes raising the size of Pell Grants and providing funding for historically Black colleges and universities as well as institutions that largely serve Hispanic students or tribal communities.
AP file
- Universal prekindergarten would be established for all 3- and 4-year-olds and child-care subsidies would be provided for poorer and middle-income Americans. But the programs are funded only for six years.
- $40 billion would be provided for higher education and workforce development. This includes raising the size of Pell Grants and providing funding for historically Black colleges and universities as well as institutions that largely serve Hispanic students or tribal communities.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- Medicare would be expanded to cover hearing aids, costing an estimated $35 billion over 10 years.
- Expanded tax credits for insurance premiums tied to the Affordable Care Act would be extended through 2025. The White House says that would help 3 million uninsured people gain coverage.
- $150 billion for a Medicaid program that supports home health care, helping to clear a backlog and improving working conditions.
- $90 billion for investments that would include funding maternal health, community violence initiatives, disadvantaged farmers, nutrition and pandemic preparation.
- Out-of-pocket Medicare Part D costs for older Americans would be capped at $2,000 and the price of insulin reduced to no more than $35 a dose.
- A Medicare drug negotiation program would be established. Each year, the secretary of Health and Human Services would identify 100 brand-name drugs that lack price competition and from that list negotiate the price of up to 10 drugs in 2025, 15 in 2026 and 2027, and 20 thereafter. Insulin products must also be negotiated. A drug selected for negotiation would continue to be included in the program until competition enters the market.
AP file
- Medicare would be expanded to cover hearing aids, costing an estimated $35 billion over 10 years.
- Expanded tax credits for insurance premiums tied to the Affordable Care Act would be extended through 2025. The White House says that would help 3 million uninsured people gain coverage.
- $150 billion for a Medicaid program that supports home health care, helping to clear a backlog and improving working conditions.
- $90 billion for investments that would include funding maternal health, community violence initiatives, disadvantaged farmers, nutrition and pandemic preparation.
- Out-of-pocket Medicare Part D costs for older Americans would be capped at $2,000 and the price of insulin reduced to no more than $35 a dose.
- A Medicare drug negotiation program would be established. Each year, the secretary of Health and Human Services would identify 100 brand-name drugs that lack price competition and from that list negotiate the price of up to 10 drugs in 2025, 15 in 2026 and 2027, and 20 thereafter. Insulin products must also be negotiated. A drug selected for negotiation would continue to be included in the program until competition enters the market.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- Biden’s plan says parents earning up to 250% of a state’s median income should pay no more than 7% of their income on child care. Parents must be working, seeking a job, in school or dealing with a health issue to qualify.
AP file
- Biden’s plan says parents earning up to 250% of a state’s median income should pay no more than 7% of their income on child care. Parents must be working, seeking a job, in school or dealing with a health issue to qualify.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- $150 billion would be committed toward housing affordability with a goal of building more than 1 million new rental and single-family homes. The goal would be to reduce price pressures by providing rental and down payment assistance.
AP file
- $150 billion would be committed toward housing affordability with a goal of building more than 1 million new rental and single-family homes. The goal would be to reduce price pressures by providing rental and down payment assistance.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- Clean energy tax credits would receive $320 billion worth of funding. These credits over 10 years would help businesses and homeowners shift to renewable energy sources for electricity, vehicles and manufacturing.
- $105 billion would be directed toward investments that would improve communities' ability to withstand extreme weather caused by climate change. The funding would also create a Civilian Climate Corps that focuses on conserving public lands and bolstering community resilience to flooding, drought and other weather emergencies.
- $110 billion would help develop new domestic supply chains and develop new solar and battery technologies. Support would also be given to existing steel, cement and aluminum industries.
- $20 billion would be allotted for the government to become the buyer of clean energy technologies as part of its procurement process.
- $9 billion would be allocated for lead remediation projects, such as the replacement of water lines or the replacement of school drinking water fountains that may contain lead.
AP file
- Clean energy tax credits would receive $320 billion worth of funding. These credits over 10 years would help businesses and homeowners shift to renewable energy sources for electricity, vehicles and manufacturing.
- $105 billion would be directed toward investments that would improve communities' ability to withstand extreme weather caused by climate change. The funding would also create a Civilian Climate Corps that focuses on conserving public lands and bolstering community resilience to flooding, drought and other weather emergencies.
- $110 billion would help develop new domestic supply chains and develop new solar and battery technologies. Support would also be given to existing steel, cement and aluminum industries.
- $20 billion would be allotted for the government to become the buyer of clean energy technologies as part of its procurement process.
- $9 billion would be allocated for lead remediation projects, such as the replacement of water lines or the replacement of school drinking water fountains that may contain lead.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- Biden's plan bolsters the IRS to improve collections and close the gap between taxes owed and taxes paid.
- A 15% minimum income tax would be applied to large corporations, along with a 1% surcharge on corporate stock buybacks. The U.S. would also be aligned with an agreement reached by more than 100 countries designed to deter multinational companies from stashing profits in low-tax countries.
- The bill would create a new surtax on multimillionaires and billionaires and close a provision that allows some wealthy taxpayers to avoid paying the 3.8% Medicare tax on their earnings.
- A $10,000 cap on state and local tax deductions would be raised to $72,500. Tax analysts say the change would largely benefit high-income households.
AP file
- Biden's plan bolsters the IRS to improve collections and close the gap between taxes owed and taxes paid.
- A 15% minimum income tax would be applied to large corporations, along with a 1% surcharge on corporate stock buybacks. The U.S. would also be aligned with an agreement reached by more than 100 countries designed to deter multinational companies from stashing profits in low-tax countries.
- The bill would create a new surtax on multimillionaires and billionaires and close a provision that allows some wealthy taxpayers to avoid paying the 3.8% Medicare tax on their earnings.
- A $10,000 cap on state and local tax deductions would be raised to $72,500. Tax analysts say the change would largely benefit high-income households.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- Those who entered the United States prior to Jan. 2, 2011, and have continuously resided there since would be eligible for renewable parole grants for five years after paying an administrative fee and completing security and background checks. The parole status gives recipients authorization to travel and work in the U.S. and deems them eligible for a Real ID-compliant driver's license or a state identification card.
AP file
- Those who entered the United States prior to Jan. 2, 2011, and have continuously resided there since would be eligible for renewable parole grants for five years after paying an administrative fee and completing security and background checks. The parole status gives recipients authorization to travel and work in the U.S. and deems them eligible for a Real ID-compliant driver's license or a state identification card.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- Eligible workers would receive up to four weeks of paid leave to reimburse them for time taken to care for a new child or other family members or to recover from illness. Biden had initially proposed 12 weeks of paid family leave.
AP file
- Eligible workers would receive up to four weeks of paid leave to reimburse them for time taken to care for a new child or other family members or to recover from illness. Biden had initially proposed 12 weeks of paid family leave.
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House passes $1 trillion bipartisan infrastructure bill, sends measure to Biden for signature
AP file
- A proposal to expand Medicare to cover dental and vision care is out because of concerns about the cost.
- A proposal to allow for up to two years of free community college is out.
AP file
- A proposal to expand Medicare to cover dental and vision care is out because of concerns about the cost.
- A proposal to allow for up to two years of free community college is out.
