The Child Tax Credit’s Future: What Has the Incoming Trump Administration Said?
Time is running out for the child tax credit and its value will plummet if not expanded by 2026, but has the incoming Donald Trump administration shown their plans?
Vice President Kamala Harris, the 2024 Democratic presidential candidate, has made expanding credit, especially for families with newborns, a key part of her economic platform, but the future of the credit now lies in the hands of the incoming In the hands of President Trump’s incoming administration and Potential plans for new tax breaks. Both Trump and his running mate, Sen. J.D. Vance, have raised similar hopes for expanding the credit, although the ideas are less concrete than Harris. A recent report from The New York Times The differences between their views and Harris’s are revealed.
Read on to learn what might happen to the child tax credit in the near future. For more information about taxes, learn how the IRS handles Payment apps moving forward and What changing tax brackets might mean for you.
What is the child tax credit?
The child tax credit provides parents with a certain amount of tax relief for each dependent child under the age of 17. The credit, first introduced in 1997, currently provides $2,000 per child, of which only $1,600 is refundable, meaning you can receive this amount even if you don’t owe that much tax. The remaining $400 is non-refundable and therefore can only be used to reduce your tax liability.
2021, President Joe Biden’s American Rescue Plan The bill passed and significantly increased the child tax credit. Under the law, the credit expands to $3,600 for each child under age 6 and $3,000 for each child ages 6 to 17. The credit is also fully refundable, with a portion payable as a monthly benefit.
Research shows the temporary increase in credit in 2021 has had a significant impact on child poverty. Columbia University Center on Poverty and Social Policy Discover Payments lowers monthly fees The child poverty rate has been reduced by nearly 30%, and subsidies have benefited approximately 61 million children.
What happens to Child Tax Credit after 2021?
Congress did not extend the temporary tax relief after 2021, the child tax credit returned to its previous level, and Planned to drop again to $1,000 per child after 2025.
Efforts to expand credit since 2021 have not been successful, including Senate vote on August 1 The bill failed in a 48-44 vote, with all but three Republicans voting against it.
What do Republicans propose for the child tax credit?
Vance In an interview with CBS News on August 11, If such an issue can be resolved with Congress, he will work to expand the credit. Trump’s official “issues” page He made no separate mention of the child tax credit in his 2024 campaign, recommending lower taxes overall in just one section.
“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.”
In 2017, Trump signed the Tax Cuts and Jobs Act, which expires in 2025, increasing the child tax credit from $1,000 to $2,000. His 2024 campaign says In comments to CNBC Trump “will consider a significant expansion of the child tax credit,” but did not elaborate on his plans. A recent article about The New York Times The fate of the child tax credit The article noted that Trump was keen to boast that he had “doubled” the tax credit while in office, but the article explained that because Trump’s policies viewed the child tax credit as more of a tax cut , rather than a tax credit that anyone can claim and therefore not available to the poorest 25% of households who earn too little to file a tax return.
For more on credit history, check out CNET’s past Coverage regarding taxpayer qualifications and how is it possible Affected by joint custody arrangements.
