The House recently passed a bipartisan bill that includes changes to the federal child tax credit, which could provide assistance to millions of families, particularly low-income families with multiple children who are in the lowest income bracket. The bill will increase the tax credit amount for each child and offers substantial tax cuts for eligible households. However, the fate of the bill in the Senate remains uncertain due to reservations from some Republican senators, who claim that it includes provisions that may benefit migrants being paroled into the country by the Biden administration.
The current tax credit offers a maximum of $2,000 per child, with plans to incrementally raise the refundable amount to $1,800 by 2023, $1,900 by 2024, and $2,000 by 2025. However, the bill would keep a $2,500 income threshold for households to be eligible for refundable child tax credit payments, and it will not reinstate the monthly payments established in 2021 under the American Rescue Plan. The average household benefiting from the tax credit could see a reduction of $680 in their tax bills in 2023, but the bill remains disputed and faces further scrutiny in the Senate.
The bill also aims to enhance the tax credit for constructing or rehabilitating rental housing for lower-income households, potentially adding 200,000 housing units around the country. As for the child tax credit, the changes could benefit low-income Americans the most, but there are concerns about its implications and effectiveness, which may still hinder its course through Congress. Whether it will be passed and signed into law remains to be seen, but its potential impact on low-income families and the housing market is significant.
Overall, the child tax credit changes included in the bipartisan House bill have the potential to greatly benefit low-income families with children by providing substantial tax cuts. It aims to raise the refundable amount and increase the tax credit for each child over the next few years. Nevertheless, the fate of the bill in the Senate is uncertain, as some Republican senators are concerned about the bill’s implications, particularly regarding the child tax credit and its eligibility. Despite these challenges, the bill also seeks to improve the housing situation for lower-income households by enhancing a related tax credit, which could add thousands of housing units nationwide. The potential impact of the bill on low-income families and the housing market is significant, and its passage in the Senate would solidify these changes as part of the federal child tax credit.