Stimulus Update: Inflation Reduction Act Leaves Parents Out in the Cold

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KEY POINTS

  • Last week, the Inflation Reduction Act was signed into law.
  • While the bill does certain things to reduce costs for Americans, it fails to address some of the expenses that are specific to parents such as paid family and sick leave, an enhanced Child Tax Credit, and more.


Many helpful provisions for parents didn't make it into the bill.

For months on end, inflation has been raging. And lawmakers are doing what they can to help consumers cope.

Last week, the Inflation Reduction Act was signed into law, and it's expected to benefit Americans financially in a number of ways. First, the bill allows Medicare to negotiate drug prices directly with pharmaceutical companies, which could result in big savings for enrollees. Secondly, the bill pumps some much-needed funding into the IRS, which could result in faster tax refunds.

The bill also includes tax credits for drivers who purchase electric vehicles. And it offers up big rebates for energy-efficient home improvements.

But while all of these provisions are no doubt important, it's hard to overlook the fact that certain parent-centric provisions did not make it into the final bill. Here are a few that families are apt to miss.

1. Paid family and sick leave

Not all workers are entitled to paid family and sick leave. The previous House version of the bill included four weeks of paid family and sick leave, but now, that's off the table.

2. The enhanced Child Tax Credit

Last year, the Child Tax Credit got a nice boost. Its maximum value increased from $2,000 to $3,000 for children aged 6 to 17 and $3,600 for children under age 6. Also, parents were able to receive half of the credit via monthly installment payments.

Lawmakers initially wanted to extend the boosted version, but that didn't make it into the final bill. As such, parents are only entitled to a maximum credit of $2,000 per child this year, and they won't see monthly installment payments hit their bank accounts.

3. Universal pre-K

The previous version of the bill included free pre-K for 3- and 4-year-olds. The new version doesn't have that feature, so families with children that age who work will still need to cover the cost of childcare.

4. Lower childcare costs

The previous House version of the bill included a provision that would've limited childcare costs for families with children under age 6 to no more than 7% of income for those earning up to 250% of the state median income. With that feature gone, parents aren't protected from sky-high childcare costs.

Few benefits for lower earners

While the Inflation Reduction Act might benefit Americans in some ways, unfortunately, a lot of important provisions for parents didn't make the final cut. And at a time when inflation is still soaring, that's an unquestionably harsh blow.

Let's remember that some of the above-mentioned benefits of the Inflation Reduction Act may not do anything for lower-income, cash-strapped households. Tax credits for electric vehicles are a nice thing. But families who can barely put food on the table aren't rushing to upgrade their cars -- if anything, they're hoping they can eke out enough money to make their auto loan payments to avoid having their current vehicles repossessed.

Similarly, rebates for energy-efficient upgrades at home are nice. But those who are struggling financially aren't rushing to install solar panels or put in new appliances. As such, while it's easy to make the argument that the Inflation Reduction Act will save Americans money, lower-income families inevitably get left out in the cold.

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