House Democrats on the Ways and Means Committee, during their markup of the latest COVID-19 relief package, will consider a proposal that would allow families to receive up to $3,600 per child.
Democrats are working to pass President Biden’s American Rescue Plan, which includes an expansion of the child tax credit for 2021, using budget reconciliation. The expanded child tax credit is one of nine legislative proposals that the Ways and Means Committee released February 8 and will begin to mark up February 10.
The proposal would make the child tax credit fully refundable so that families with little to no tax liability could still receive the maximum benefit. The credit’s current value of $2,000 per year would be increased to $3,000 for children ages 6 to 17. A credit of $3,600 would be available for children under 6 years old.
The benefit would start phasing out for singles making $75,000 and couples making $150,000.
The credit would be paid out monthly beginning July 1 rather than as a one-time lump sum, with the amount based on 2019 or 2020 tax return information. However, if it becomes infeasible for the IRS to deliver monthly payments, the legislation gives Treasury Secretary Janet Yellen the power to adjust the frequency of payments.
By the end of the year, families would receive half of the total amount of the credit for which they’re eligible. The other half would be claimed on their 2021 tax returns.
The provision would also mandate the creation of an online portal, which would allow taxpayers to access and adjust information related to the credit, such as a change in the number of qualifying children or a significant change in income.
A Permanent Change?
Earlier February 8, Rep. Rosa L. DeLauro, D-Conn., introduced the American Family Act of 2021, a bill that’s similar in design to the COVID-19 relief package proposal but would make the expanded child tax credit permanent.
“This is good short-term policy with respect to addressing the pandemic, but it’s even better long-term policy because of the impact that it has on families and their children,” said House Ways and Means Committee member Suzan K. DelBene, D-Wash., during a press conference.
Estimates from Columbia University indicate that the bill would decrease child poverty by about 45 percent. The cost for the bill would be about $117 billion, based on estimates from the Joint Committee on Taxation, DelBene said.
The bill expands the credit by the same amount as the Ways and Means Committee’s proposal but phases it out for singles making $130,000 and couples making $180,000.
It similarly includes monthly payments based on expected tax liability, said DelBene — who is one of the bill’s 148 cosponsors — with a maximum benefit of $300 per month for children younger than 6 and $250 per month for children ages 6 to 17.
“There’s a lot of learnings that took place that I think we can capture, given the economic impact payments that were sent out to Americans,” DelBene said. “I’m confident that the Biden administration and Secretary Yellen are going to be able to use that going forward and help us get monthly payments out.”