The U.S. House of Representatives has approved the Tax Relief for American Families and Workers Act of 2024, a bill aimed at enhancing the child tax credit over the next three years. Geared towards providing financial relief to lower-income families with children the proposed changes, if signed into law could benefit millions by increasing the maximum refundable amount per child.
House-Approved Child Tax Credit Expansion Faces Senate Review
The child tax credit expansion bill which now moves to the Senate seeks to build on the temporary expansion of the child tax credit implemented in a 2021 COVID aid package. The proposed changes differ from the previous expansion with an estimated 16 million children in low-income families benefiting from the boosted credit in the first year.
Unlike the 2021 pandemic child tax credit the proposed plan covers tax years 2023, 2024, and 2025. The changes include an increase in the maximum refundable amount starting at $1,800 per child in 2023 and reaching $2,000 in 2025. The credit remains partially refundable allowing families to receive a refund even if they owe no taxes.
Critics of the former child tax credit expansion argue that it kept money from those who needed it most. The proposed expansion aims to address this by providing more money to lower-income families. However, the bill’s fate remains uncertain in the Senate with ongoing discussions and potential hurdles.
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Eligibility Criteria and Potential Impact on Families
The new child tax credit’s qualifying requirements are the same as they are for the current benefit; applicants must have a modified adjusted gross income (MAGI) of no more than $200,000, or $400,000 for joint filers. The youngster must meet certain requirements be under the age of 17 and have a valid Social Security number.
While the expanded credit does not follow the monthly advance payment model of 2021 families would claim the credit when filing tax returns. The proposed changes aim to ensure lower-income families receive more substantial benefits with estimated impacts on single parents and families with multiple children.