Democrat lawmakers aim for bipartisan effort to enhance Child Tax Credit.

Proposed Legislation Aims to Bring Back Child Tax Credit

Lawmakers are currently considering a proposed legislation that would reinstate the 2021 American Rescue Plan child tax credit (CTC) monthly payment and make it a permanent fixture. To assess the impact of the CTC over the past 25 years, the Senate Subcommittee on Taxation and IRS Oversight held a hearing on July 13.

During the COVID-19 pandemic, the American Rescue Plan provided monthly payments of $300 per child under the age of 6 and $250 for each child aged 6 through 17. However, this program expired at the end of 2021, and efforts to extend it fell short, even with a Democratic-controlled Congress.

According to Rep. Rosa DeLauro (D-Conn.), the expanded and improved CTC was the largest tax cut for working families in generations. In 2021 alone, it reached over 61 million children and lifted nearly 4 million out of poverty.

Last month, Ms. DeLaura, along with Reps. Suzan DelBene (D-Wash.) and Ritchie Torres (D-N.Y.), reintroduced the American Family Act, aiming to reinstate the CTC.

“When we expanded and improved the Child Tax Credit in 2021 under the American Rescue Plan, it provided unprecedented economic security for American families,” Ms. DeLauro said in a statement. “These monthly payments helped parents pay bills, keep healthy and nutritious food on the table, afford school clothes and supplies, pay for a music lesson or a new pair of cleats, or manage a mortgage or rent payment. It worked, and it is time we get it working for families and children once more.”

Ms. DelBene also praised the 2021 enhanced CTC, calling it one of the most transformational policies from the American Rescue Plan. She emphasized its positive impact on reducing child poverty, boosting the economy, and helping parents provide for their children.

In 2023, the maximum tax credit per qualifying child is $2,000 for children 5 and younger, or $3,000 for children 6 through 17. To be eligible for the CTC, parents and guardians must have an adjusted gross income of less than $200,000 when filing individually or less than $400,000 if filing a joint return with a spouse.

The proposed legislation currently has 210 co-sponsors in the House, and a companion bill in the Senate, led by Sen. Sherrod Brown (D-Ohio), has 40 cosponsors.

If passed, the legislation would provide monthly payments of $300 for families with children 6 and under, and $250 for families with children aged 6 to 17. Additionally, it includes a new feature called a “baby bonus,” which would increase the credit to $2,000 in the month a baby is born.

The CTC was initially created as part of the 1997 Taxpayer Relief Act and has since been expanded with bipartisan support.

History of Cooperation

Sen. Michael Bennet (D-Col.) chairs the Subcommittee on Taxation and IRS Oversight and highlighted the history of bipartisan cooperation regarding the CTC in his opening statement at the July 13 hearing.

“Although there have been occasional differences in approach, I think it is important to recognize that the child tax credit has been expanded—both in size and to whom it’s available—as a result of bipartisan consensus and agreement,” Mr. Bennet said.

Mr. Bennet noted that Republican members of the House were among the first to embrace the CTC in 1994, including a $500 credit in Newt Gingrich’s “Contract with America.” He also mentioned that President George W. Bush worked with Democrats and Republicans to make the CTC refundable for low-income families.

In 2017, Congress passed tax cuts introduced by President Donald Trump without bipartisan support, which increased the maximum size of the CTC to $2,000 and expanded its availability to wealthier families.

Mr. Bennet encouraged lawmakers to continue working together to support the CTC and its positive impact on American families.