Joe Biden

Build Back Better Extends the $3,000 Enhanced Child Tax Credit for a Year


In a move that could benefit many families, House Democrats passed the $1.75 trillion Build Back Better Act Friday, which includes a one-year extension of the enhanced child tax credit (CTC).

The enhanced CTC is a core component of President Joe Biden's plan to overhaul the social safety net and reduce child poverty in the U.S. This year, the American Rescue Plan (ARP) increased the CTC from $2,000 per child to as much as $3,000 or $3,600, depending on the age of the child, for many families.

It also made it fully refundable, meaning low-income families that do not typically earn enough to file a tax return also qualify for the payments.

In addition to increasing the amount families receive, the ARP made half of the credit available in advance, through monthly payments worth up to $300 per child. Since families began receiving those payments in July, researchers found that it lifted 3 million children out of poverty and food insecurity dropped significantly.

The Build Back Better Act would keep the increased amounts through 2022 and keep the credit fully refundable. Joint filers making up to $150,000 annually and unmarried tax filers earning up to $112,500 qualify for the enhanced payments, and could receive the money in monthly installments for the entirety of 2022.

Biden had originally sought to keep the enhanced credit through 2025, but it was trimmed during negotiations.

The bill now heads to the Senate, where it will likely be revised before it is signed into law. While most Democrats want to pass the CTC provision as is, Sen. Joe Manchin, D-W.V., has floated adding a work requirement to the benefit, which would limit which families receive it.

Sign up now: Get smarter about your money and career with our weekly newsletter

Don't miss:

Copyright CNBC
Contact Us