The Child Tax Credit (CTC) is poised for a boost as a bipartisan bill progresses through the legislative pipeline. Known as the Tax Relief for American Families and Workers Act of 2024, this legislation, currently en route to the Senate, aims to enhance support for eligible families.
Under this proposed bill, the refundable portion cap of the child tax credit would see an increase from $1,800 to $1,900 to $2,000 annually, spanning from 2023 to 2025.
Boosting Family Finances
Having secured passage in the House of Representatives, the $78-billion package is the result of collaboration between Missouri Republican Rep. Jason Smith, chair of the House’s tax committee, and Oregon Democrat and finance Chairman Ron Wyden.
Earlier in January, lawmakers struck a bipartisan agreement to expand the child tax credits and fortify the low-income housing tax credit, alongside bolstering certain business tax credits. As a component of this initiative, access to the child tax credit would undergo expansion, with a gradual increment in the refundable segment projected for the years 2023 through 2025.
Additionally, penalties would be waived for larger families. Before clearing the House, the House Ways and Means Committee endorsed the legislation with a vote of 40-3 in mid-January.The proposed legislation enjoys the support of President Joe Biden, as evidenced by White House spokesman Michael Kikukawa’s statement commending the efforts of Chairman Wyden and Smith.
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Child Tax Credit Bill Progress and Potential Impact
The bill received resounding approval in the Republican-led House of Representatives, with a vote count of 357 – 70 on January 31, propelling it to the Senate. However, some lawmakers advocate for alterations to the bill. West Virginia Republican Sen. Shelley Moore Capito emphasizes the importance of a comprehensive committee process to allow for meaningful input.
Indiana Republican Sen. Todd Young echoes the sentiment for potential revisions to the bill, though specifics remain undisclosed. The bill’s fate rests on securing 60 votes in the Democrat-led Senate, with the timing of a vote yet to be determined. Wyden, chair of the Senate’s tax-writing committee, intends to confer with Senate leadership on the matter.
Regarding the implementation timeline, the Internal Revenue Service (IRS) anticipates issuing funds within six to 12 weeks post-passage of the bill. IRS Commissioner Danny Wefel underscores the importance of timely tax return filings, reassuring taxpayers that additional refunds will be processed seamlessly.
Analyses by the Center on Budget and Policy Priorities (CBPP) project significant benefits from the bill, estimating around 16 million children would benefit in the inaugural year alone.
The expansion is forecasted to elevate over half a million children above the poverty line by 2025, providing crucial financial assistance to approximately 5 million children from families with incomes below the poverty threshold. This bipartisan endeavor aims to alleviate financial strain for millions of families while addressing child poverty in the United States.
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