Stimulus Update: Monthly Child Tax Credit Pause Looking More Likely

Many families have been relying on monthly Child Tax Credit payments. But they may not get one in January for one big reason.

Many Americans saw their finances take a big hit in the course of the pandemic. Thankfully, lawmakers made plenty of aid available, including multiple rounds of stimulus checks. In March, they also boosted an important credit for families -- the Child Tax Credit.

Prior to 2021, the Child Tax Credit maxed out at $2,000 and wasn't fully refundable. This year, it maxes out at $3,600 for children under the age of 6 and $3,000 for those aged 6 to 17. The credit is also fully refundable, so families will get the total amount they're owed regardless of what their tax liability looks like.

Just as importantly, half of the boosted Child Tax Credit has been coming in the form of monthly installment payments. The first one hit recipients' bank accounts in July and the most recent payment arrived in mid-December.

President Biden's Build Back Better plan includes a one-year extension of the boosted Child Tax Credit. And while it passed a House vote, it needs Senate approval to move forward.

If lawmakers pass the bill quickly, Americans receiving the boosted Child Tax Credit could enjoy nice continuity with regard to those monthly payments. But at this point, even President Biden is acknowledging that his bill may not pass in Congress before 2021 comes to a close. And so those who have been relying on those monthly Child Tax Credit payments may see that lifeline dry up, at least temporarily.

An unwanted holdup

Senate Democratic leader Chuck Schumer has set a Christmas deadline for passing the Build Back Better plan, but lawmakers aren't all on the same page with regard to its contents. And so at this point, the chances of it passing before the end of the year are growing slimmer.

Part of the holdup comes from Democratic Senator Joe Manchin, who doesn't support the bill in its current form. Democrats need Manchin's buy-in for a solid shot at having the Build Back Better plan pass.

Right now, Democrats are in talks with Manchin in an attempt to move Biden's spending bill along. But there's a strong chance lawmakers won't come to an agreement in time to keep those monthly Child Tax Credit payments going steady into January.

All of this is coming at a time when inflation is rampant and many families are struggling to keep up with rising living costs. November's Consumer Price Index reading showed a 6.8% rise in the cost of consumer goods compared to the previous year.

A silver lining

The good news in all of this is that lawmakers are fighting to keep the boosted Child Tax Credit in place. But given where negotiations are at, those who have been counting on those monthly payments may need to come to terms with the fact that that money won't be arriving in mid-January. If the spending bill passes in early 2022, those in line for Child Tax Credit installment payments may be eligible for a catch-up payment if January's is missed, but it's too soon to know the logistics of how that might play out.