New Congressional Plan Calls For Renewal of Child Tax Credit, But With Major Trade-Offs
A new Republican Congressional plan calls for renewing the child tax credit, which could make a noticeable financial impact on American families.
However, some tax and financial experts are warning that the renewal of this particular credit could have major trade-offs.
A CNBC report notes:
The proposal, called the Family Security Act 2.0, was created by Republican Sens. Mitt Romney of Utah, Richard Burr of North Carolina and Steve Daines of Montana, who describe it as a “pro-family, pro-life and pro-marriage plan.”
The proposal follows the expiration of an expanded child tax credit that gave families access to monthly child tax credit payments for the first time. That included $300 per month for each child under age 6 and $250 per month for each child ages 6 through 17.
This expanded version of the child tax credit program began in July 2021 and ended in December of the same year.
In 2022, the child tax credit reverted to $2,000 per child under 17, without advance monthly checks.
CNBC spoke to staff members at the Center on Budget and Policy Priorities who noted that the "expanded child tax credit helped reduce child poverty by about 30% as of December."
Chuck Marr, the Center's vice president for federal tax policy shared, “The research is so strong that kids’ lives would be so much better — school, health, future earnings."
However, due to some new analysis, the Center also believes that there is a "major flaw" in the Senators' proposed solution.
Under the current child tax credit system, children in families with under $10,000 in income annually have their credit reduced proportionally -- with some receiving no money at all.
Last year's American Rescue Plan Act temporarily made the credit fully refundable, which meant it was fully available to children in these households.
Despite this potential issue, the analysis also found numerous strengths in the bill. For one thing, the proposed credit phases in more quickly than before on a per-child basis as families earn additional income.
Furthermore, the bill phases in additional funding at the first dollar of additional income rather than starting after the first $2,500, which is how the current system functions.
Finally, it eradicates the current $1,500 cap that families can receive as a refund.
What do you think about this new Republican plan to renew the child tax credit program?
Rebekah's search engine optimization career began completely by accident as a college student. Over the course of her career so far, she has "grown up" with the SEO industry, from writing content while juggling classes to managing her own teams of writers and overseeing SEO strategy in subsequent roles. She is excited to bring her passion for high-quality content to CountingWorks, Inc.
In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.
Join 60,000 who get our weekly newsletter. No spam.
Need help selecting a firm?
Use our specialized search engine and get matched to the best accounting and tax firm for your needs.