Stimulus Update: 19 Million Children Are Losing Out on the Boosted Child Tax Credit This Year

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  • The Child Tax Credit got a major boost in 2021, and that boost expanded eligibility.
  • Now, many low-income families aren't getting money from the credit.

A lot of families aren't getting the aid they need and deserve.

When the American Rescue Plan was signed into law in March of 2021, it did a lot more than just blast out a round of stimulus checks. It also boosted the Child Tax Credit.

Normally, the Child Tax Credit maxes out at $2,000 per child, and only a portion of that is refundable. Last year, the maximum value of the Child Tax Credit rose to $3,000 for children aged 6 to 17, and $3,600 for children aged 6 and under. The credit also changed to become fully refundable, so households with a $0 tax liability could still claim the credit in full.

Last year's boosted Child Tax Credit was also partially paid in monthly installments that hit bank accounts between July and December. That allowed many households to keep up with their bills as inflation levels started to surge.

But one overlooked aspect of last year's Child Tax Credit enhancement is that it allowed more recipients than usual to receive the credit. And now that last year's boost is off the table, an estimated 19 million children who were eligible for the Child Tax Credit in 2021 are no longer eligible today, as per the Center on Budget and Policy Priorities.

That's problematic, though. The reason? It's low-income families who are now excluded from the credit, and they're the ones who no doubt need it the most.

A tough blow for low-income households

Millions of children are losing out on the Child Tax Credit this year because their families' incomes are too low to qualify for the credit, or to qualify for the credit in full. The Center on Budget and Policy Priorities explains that the credit phases in largely based on income more so than any other factor. So a family with a low income often receives the same total credit whether they have one child in their household, two, or more.

By contrast, higher-income households commonly receive their full $2,000 per child regardless of how many children they have. That's because these families are more likely to have some sort of tax liability. And so even though the Child Tax Credit is only partially refundable this year, because of that tax liability, they're able to get the full value of the credit.

Changes are in order

The boosted Child Tax Credit helped pull millions of children out of poverty in 2021. It also helped reduce food insufficiency rates among children.

Because the boosted credit brought forth so many positive changes, lawmakers are still fighting to put an enhanced version in place. It may not end up being the same version families saw in 2021, but it could be a more generous version than what households with children are eligible to receive today.

The big question, however, will be how low-income families factor in as far as eligibility goes. Some lawmakers are still insistent that there be a minimum income requirement to collect the credit, or collect it in full. That's something that will need to be worked out to move forward with plans to bring the boosted Child Tax Credit back.

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