At the beginning of 2024, the U.S. House of Representatives passed $78 billion tax legislation that includes a newly expanded federal child tax credit (CTC) and various tax breaks for businesses.
Since then, the bipartisan tax package has been stalled in the U.S. Senate. Recently, hope that the new child tax credit will become law dwindled again, after the bill failed to advance in the Senate.
The bipartisan tax bill also included provisions that would have adjusted the CTC for inflation and allow families to use prior year income to calculate eligibility. That provision became a sticking point for some Republican senators.
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For example, Senate Finance Committee ranking member Mike Crapo (R-Idaho) has said using prior-year income would allow families with no income to claim the credit and would "transform the CTC from primarily working family tax relief into a government subsidy."
Despite the setback, Democratic leaders like Senate Majority Leader Chuck Schumer (D-NY) have expressed hope for progress on the child tax credits in the future. For now, here’s what you need to know.
Related: Kamala Harris Calls for Expanded Child Tax Credit
Child tax credit 2024 update
At this point, it is not clear whether an expanded child tax credit will become law. The tax package would need 60 votes to pass the Democratic-led Senate.
However, the child tax credit expansion, if it does happen, won’t reach as far as it did under President Biden’s American Rescue Plan.Here's what the expansion would look like under the House version of the bill:
- Ensuring families with lower incomes and multiple children would qualify for a larger portion of the credit. (The maximum refundable portion of the credit would have increased from $1,600 to $1,800 for the 2023 tax year.)
- Adjusting the child tax credit amount for inflation.
- Giving families the option to use prior year income to determine the refundable amount of the credit (the provision in question that could be removed).
Given the current framework, policymakers say families with the lowest incomes and multiple children will benefit the most from an expanded child tax credit.
However, even if the new CTC doesn't become law, the refundable portion of the child tax credit will increase for the 2024 tax year. But, the scheduled increase will not benefit families with lower incomes like the proposed child tax credit would.
Bipartisan tax bill child tax credit
The tax package that includes expanding the child tax credit would come with a hefty price tag of approximately $78 billion. How the expansion would be funded has been key in negotiations between Democrats and Republicans. The clawing back of a pandemic-era tax credit, the employee retention credit (ERC), could in part fund the new child tax credit deal.
The ERC offered incentives to businesses to retain employees, but as Kiplinger has reported, theIRShas seen a significant amount offraudulent ERC claims. The agency issued amoratorium on processing new claimsand offered programs to allow taxpayers towithdrawor pay back potentially incorrect claims. (The deadline for one such program was March 22.)
However, funding an expanded child tax credit is not the only hurdle the tax package has faced. As mentioned, the bipartisan tax deal involves compromises on other issues, which include restoring some business incentives from the Tax Cuts and Jobs Act (also known as the Trump Tax Cuts).
Increased child tax credit
The pandemic-era expanded child tax credit kept millions of children out of poverty, but that changed when the credit expired. Data show the poverty level increased from 5.2% to 12.4% when families could no longer benefit from the expansion.
Democrats have been trying to bring the federal expanded child tax credit back since its expiration, but have so far failed.
In the meantime, several states have expanded child tax credits. For more information, see Kiplinger's report Who Will Get an Expanded Child Tax Credit This Year?
Related Content
- Child Tax Credit: Who Qualifies and What It’s Worth
- Families and Businesses Would Get Big Tax Breaks in Bipartisan Tax Deal
- A Bunch of IRS Tax Deductions and Credits to Know
FAQs
The CTC is worth up to $2,000 per child for the 2024 tax year. The refundable portion of the CTC, called the Additional Child Tax Credit (ACTC), increased to $1,700 in the 2024 tax year. The CTC operates as a partially refundable tax credit, not as monthly payments as in some prior years.
What is the update for the Child Tax Credit? ›
The enhanced credit allowed for qualifying children under age 6 and children under age 18 has expired. For 2023, the initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where modified AGI income exceeds $200,000 ($400,000 in the case of a joint return).
Did they pass the $3600 Child Tax Credit? ›
The American Rescue Plan Act of 2021 temporarily expanded the child tax credit for the 2021 tax year to $3,600 per child younger than age 6 and $3,000 per child up to age 17.
Has the House of Representatives passed a bill to expand the Child Tax Credit? ›
WASHINGTON – Today, the House of Representatives passed bipartisan legislation expanding the Child Tax Credit, strengthening the Low Income Housing Tax Credit, and restoring the corporate research and development tax credit. The legislation previously passed out of the Ways and Means Committee on a 40-3 vote.
How much do you get back in taxes for a child in 2024? ›
Enacted in 1997, the credit currently provides up to $2,000 per child to about 40 million families every year.
What are the tax changes for 2024? ›
For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $750 from 2023; and for heads of households, the standard deduction will be $21,900 for tax year 2024, an increase of $1,100 from the amount for tax year 2023.
What is the Earned income credit for 2024? ›
If you qualify, for tax year 2024, the minimum you claim for the Earned Income Tax Credit is $632 and maximum you could get is $7,830. The amount you get is based on income and family size.
What is the IRS extra Child Tax Credit? ›
Child Tax Credit (partially refundable)
If you have a child, you may be eligible for the Child Tax Credit. For 2023, the credit is up to $2,000 per qualifying child. To qualify, a child must: Have a Social Security number.
Who qualifies for the $500 other dependent credit? ›
This credit can be claimed for: Dependents of any age, including those who are age 18 or older. Dependents who have Social Security numbers or Individual Taxpayer Identification numbers. Dependent parents or other qualifying relatives supported by the taxpayer.
Did Senate pass CTC 2024? ›
At the beginning of 2024, the U.S. House of Representatives passed $78 billion tax legislation that includes a newly expanded federal child tax credit (CTC) and various tax breaks for businesses. Since then, the bipartisan tax package has been stalled in the U.S. Senate.
How do I get a 10,000 tax refund? You could end up with a $10,000 tax refund if you've paid significantly more tax payments than you owe at the end of the year.
Who qualifies for the additional Child Tax Credit? ›
Additional Child Tax Credit qualifications
To qualify, one of these must apply: Your earned income must be more than $2,500 for 2023. You must have three or more qualifying children.
What is the new IRS child tax credit for 2024? ›
For 2024 (taxes filed in 2025), the child tax credit will be worth $2,000 per qualifying dependent child if your MAGI is $400,000 or below (married filing jointly) or $200,000 or below (all other filers).
What is the new child tax credit expansion? ›
The maximum credit amount has increased to $3,000 per qualifying child between ages 6 and 17 and $3,600 per qualifying child under age 6. If you're eligible, you could receive part of the credit in 2021 through advance payments of up to: $250 per month for each qualifying child age 6 to 17 at the end of 2021.
What president signed the child tax credit? ›
The American Rescue Plan Act – which President Biden signed into law in 2021– included a revolutionary expansion of the existing Child Tax Credit (CTC). This new CTC – a provision my Ways and Means Committee colleagues and I helped craft –guaranteed monthly income for families nationwide through the end of 2021.
Will the Senate pass the tax relief for American families and workers act of 2024? ›
Today the Senate failed to pass the American Families and Worker's Act of 2024 (TRAFWA) by a vote of 48 to 44 (it required 60 votes to pass). This is the bill that was passed by the House in January 2024 on a vote of 357 to 70.
What is the Child Tax Credit for 2025? ›
Policy Change. The Child Tax Credit (CTC) can be claimed on a family's annual income tax return to help offset the cost of raising children. TCJA made several key changes to the CTC, most notably temporarily doubling the maximum CTC from $1,000 to $2,000 per child for children under 17.
How much is Child Tax Credit 2024 in California? ›
California is offering families a fully refundable one-time tax credit worth up to $3,600 per qualifying child in 2024, along with an additional young child tax credit for children under 6 years old.
