The clock is ticking on the child tax credit, the value of which will decline significantly if it is not expanded by 2026. But has the new administration of Donald Trump said anything about its plans in this regard?
Vice President Kamala Harris, the 2024 Democratic nominee for president, made expanding the credit, particularly for families with newborns, a key part of her economic platform, but the future now lies in the hands of the incoming administration of President-elect Trump And his possible plans for new tax relief. Trump and his running mate, Sen. JD Vance, have similar hopes for expanding the credit, although those ideas were less concrete than Harris’s a recent report from the New York Times They highlight the discrepancy between her views and those of Harris.
Read on to find out what could happen to the child tax credit in the near future. For more information on taxes, here’s how the IRS handles them Payment apps are advancing And what a change in tax class could mean for you.
What is the child tax credit?
The child tax credit provides parents with some tax relief for each child under age 17 that they claim as a dependent. First introduced in 1997, the credit currently offers $2,000 per child, with only $1,600 of that amount being refundable, meaning you can get that amount even if you don’t owe that much in taxes. The remaining $400 is non-refundable and therefore can only be used to reduce your tax bill.
In 2021, President Joe Biden’s American Rescue Plan was passed and brought with it significant increases in the child tax allowance. Under the law, the credit was expanded to pay $3,600 per child under age 6 and $3,000 per child ages 6 to 17. The loan was also fully repayable and partially payable as a monthly benefit.
Studies suggest that the temporary credit increase in 2021 had a significant impact on child poverty. Columbia University Center on Poverty and Social Policy found that the payments reduced the monthly installments Reduce child poverty by almost 30%, with payments reaching around 61 million children.
What will happen to the child tax allowance after 2021?
After 2021, Congress did not extend the temporary tax break and the child tax credit returned to its previous level After 2025 it is expected to fall back to $1,000 per child.
Efforts to expand the credit since 2021 also failed a vote in the Senate on August 1st that failed by a vote of 48 to 44, with all but three Republicans voting against it.
What have Republicans proposed for the child tax credit?
Vance said in an interview with CBS News on August 11 that he would work to increase the credit if such a thing could be resolved with Congress. Trump’s official “Issues” page In his 2024 election campaign, he did not specifically address the child tax credit, but only suggested in one section that taxes would be generally reduced.
“I would like to see a child tax credit of $5,000 per child,” Vance said in the interview. “But of course you have to work with Congress to see how possible and feasible that is.”
The child tax credit was increased from $1,000 to $2,000 in 2017 when Trump signed the Tax Cuts and Jobs Act, which expires in 2025. That was what he said in his 2024 election campaign in a comment to CNBC that Trump “will consider a significant expansion of the child tax credit,” but did not elaborate on his plans. A recent article about the fate of the child tax credit from the New York Times noted that Trump likes to brag that he “doubled” the tax credit while in office. However, the article explained that this was not the case because Trump’s policies viewed the child tax credit as a tax cut rather than a credit that anyone can claim applies to the poorest 25 percent of families who earn too little to to report taxes.
For more on the history of the loan, check out CNET’s past Taxpayer Eligibility Reporting and how it can be are affected by joint custody agreements.
