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Child tax credit clears Budget Committee: Who would qualify for monthly checks?

FILE - In this June 15, 2018, file photo, cash is fanned out from a wallet in North Andover, Mass. (AP Photo/Elise Amendola, File)

(NEXSTAR) – President Joe Biden’s stimulus plan moved one step closer to reality Monday after the House Budget Committee advanced a $1.9 trillion package, bringing with it some significant potential changes to the childcare tax credit for 2021.

If enacted, the changes to the CTC would put $1,000 more per child into the pockets of many American parents in 2021.


Parents of children 16 and younger were already eligible for a tax credit in previous years, including 2020, but those payments were one-time benefits capped at $2,000.

The Democrat-backed recovery bill would make the payments monthly and expand both the benefit amount and the age group for this year. The Biden administration believes the combined stimulus efforts could greatly reduce childhood poverty.

“Researchers at Columbia University estimate that these proposals will cut child poverty in half,” the White House said in its overview of the package.

The proposed child tax credit adjustments include increasing the benefit from $2,000 per child to $3,000 per child this year. Parents of children under age 6 would be eligible for an even larger $3,600 payment. The plan would also include $3,000 benefits to the parents of 17-year-olds who meet plan qualifications.

However, the phase out for the credit in 2020 was a household income above $400,000 for married filers. The proposed increases are expected to begin phasing out for families earning above $150,000. People over that threshold should not see less benefit than in 2020, but they won’t see the full increase offered to lower income parents.

Perhaps the most notable change would be the monthly infusion of cash in place of the annual tax filing benefit.

According to CNN, if Congress passes the bill, fractional monthly payments of the credit would begin in July and last for one year. Congressional Democrats and White House officials have previously said they would push to maintain the policy indefinitely.

As with the rest of the relief package, changes to the CTC seem likely to pass in some form. The Democrats are using the budget reconciliation process to reduce the number of total votes needed to pass the relief bill, reducing and perhaps eliminating the need for Republican support of the stimulus proposal.