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March 18, 2021
Last week, Congress finalized, and President Biden signed into law, the American Rescue Plan to provide COVID relief to families. The bill includes changes to the tax code that will offer significant relief to families with children who have been hit hardest by the pandemic.
The changes in the Child Tax Credit, in particular, are anticipated to help as many as half of the American children currently living in poverty by lifting their families above the poverty line. The maximum per-child tax credit a family can receive is increasing from $2,000 to $3,000 for each child age 6-17, and to $3,600 for each child from birth to age 5. In addition, the child tax credit is now fully refundable. Finally, half of the benefits will be distributed in monthly checks from July 2021 through December 2021, and the remaining portion will be refunded when tax returns are filed in 2022. This means families with the fewest economic means will receive a monthly payment to help sustain their families, with additional relief provided when they file their taxes.
Overall, more than 90% of all children in the US are projected to benefit from this child tax credit expansion, which could represent the single most significant step to reduce child poverty in the United States in recent history.
Brazelton Touchpoints Center is deeply appreciative of all those who have advocated for decades for changes to child tax policy that will benefit children living in poverty whose working parents do not earn enough to benefit from existing child tax credits. This immediate relief to American families will help lift millions of children out of poverty, offering them a chance at economic security, healthy nutrition, and housing stability, all of which are necessary for children to thrive and reach their full potential. Although the expanded tax credit is available for one year, advocates hope that evidence of its impact on children and families will lead Congress to make the credit permanent.
The legislation includes many other important provisions that will help families struggling through the pandemic, including COVID relief checks; housing benefits; assistance with health insurance; and expansion of unemployment, food, and child care benefits; to name just a few. You can learn more about what the American Rescue Plan means for children families at the Children’s Defense Fund website.