As we continue to navigate through this pandemic, economic recovery has been a big topic. At the beginning of the year, President Biden stated one of his initiatives is to help bolster our economy through jobs and government assistance. While it’s too early to speak on the job market, we’re seeing plenty in the way of government assistance — one of his latest initiatives being a new child tax credit.
In March, the Senate passed the proposed $1.9 trillion American Rescue Plan Act.1 Among additional stimulus payments, raise in minimum wage, and extended unemployment insurance, we saw a child tax credit that will begin in July of 2021. This IRS will be sending out this credit in monthly installments and will continue through the end of this year.
The full amount of the child tax credit is available to those with children and an adjusted gross income of less than $75,000 or $150,000 for those married filing jointly. The full credit amount will provide up to $3,000 for children ages 6 to 17 and $3,600 for children under 6. This credit will be paid in monthly installments of $250 for older children and $300 for those up to 6 years of age. Those making less than $200,000 annually, or $400,000 for married couples will still be eligible, but a lower amount of $2,000.
A recent study from the Institute of Taxation and Economic Policy shows that around 83 million children reside in households that could benefit from this child tax credit expansion.3 While we’re unsure of how long this road to economic recovery will be, steps are being taken to support our country’s infrastructure.
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