Will the Boosted Child Tax Credit Come Back in 2023?

It's hard to know for sure, but we do have some clues.

In March 2021, lawmakers approved the American Rescue Plan, a massive spending bill that was designed to provide relief during the pandemic. That bill allowed for a third round of stimulus checks worth up to $1,400 apiece, and it also boosted the Child Tax Credit in a big way.

Prior to 2021, the Child Tax Credit had a maximum value of $2,000 per child, and only a portion of that was refundable. As a quick primer, a tax credit is a dollar-for-dollar reduction of your tax liability. So if you owe the IRS $1,000 and are able to claim a $1,000 tax credit, you whittle your tax bill down to $0.

Meanwhile, some tax credits aren't refundable, so they won't pay you anything if you don't owe the IRS money. The Child Tax Credit was partially refundable before 2021, but last year, it became fully refundable. Not only that, but its maximum value increased to $3,000 for children aged 6 to 17, and $3,600 for children under age 6.

Plus, half of the Child Tax Credit was paid in monthly installments that hit recipients' bank accounts from July through December. Normally, the Child Tax Credit is paid as a single lump sum, and recipients have to wait to file a tax return to get it.

Lawmakers were hoping to keep the boosted Child Tax Credit in place for 2022 so they could continue those monthly payments. And given the way inflation has surged this year, that would've been a good thing for cash-strapped families with maxed-out credit cards.

But unfortunately, the enhanced version of the Child Tax Credit did not get approved for 2022. However, lawmakers are still keeping it on their radars, and some are fighting to bring it back. As such, families don't have to write off the idea of a boosted credit just yet.

The push to bring back the boosted Child Tax Credit

The enhanced Child Tax Credit helped many families shore up their finances, and it also led to a notable decrease in food insufficiency and child poverty rates. Once the boosted credit went away, the bulk of that progress was reversed.

That's something lawmakers have noticed. And it's also why many are still fighting to bring back some sort of boosted version of the Child Tax Credit. It may not look exactly the same as the boost that was approved in 2021, but at this point, any enhancement is apt to be better than nothing.

That said, it's difficult to say whether the boosted Child Tax Credit will make a return in 2023. While lawmakers on both sides of the political spectrum seem to agree it's necessary, there's debate as to how to bring that boost to life.

Some lawmakers, for example, want to impose a minimum income requirement for eligibility. But that change could make it so the country's neediest families aren't eligible to receive the boosted credit, either at all or in full.

Families with children shouldn't lose hope

There's a reasonable chance that at some point in time, lawmakers will approve an enhanced version of today's Child Tax Credit. But families with children should also remember the credit didn't go away in 2022 -- it simply reverted back to its former state. That means some households are still eligible for a credit of up to $2,000 per child this year.

To claim it, they'll need to file taxes for 2022 once the IRS starts accepting returns, which usually happens in late January. Tax returns that are filed electronically typically see refunds processed within 21 days. So families that are due money from this year's Child Tax Credit could conceivably get paid by February if they act quickly.