Child Tax Credit 2024 Update as IRS Poised to Expand Amount

Child tax credits are likely to be increased for eligible families as a bipartisan bill continues its way through the legislative process.

The Tax Relief for American Families and Workers Act of 2024 is currently making its way to the Senate would raise the refundable portion cap of child tax credit from $1,800 to $1,900 to $2,000 each tax year from 2023 to 2025. The bill has already passed in the House of Representatives.

The $78-billion package was agreed by Missouri Republican Rep. Jason Smith, chairman of the House’s tax committee, and his Senate counterpart, Oregon Democrat and finance Chairman Ron Wyden. Newsweek has contacted both for comment via email outside of a normal working hours.

The Story So Far

In January lawmakers agreed a bipartisan deal that would expand child tax credits and enhance low-income housing tax credit while also boosting some business tax credits.

As part of the bill, access to child tax credit would be expanded. There would be a gradual rise in the refundable segment for the years 2023, 2024 and 2025. Penalties would also be removed for larger families. Prior to passing in the House, the House Ways and Means Committee voted 40-3 in mid-January to send the legislation to the floor.

The potential legislation has the backing of President Joe Biden. “We appreciate Chairman Wyden and Chairman Smith’s work toward increasing the child tax credit for millions of families and supporting hundreds of thousands of additional affordable homes, and look forward to reviewing the full details of their agreement,” White House spokesman Michael Kikukawa said in a statement seen by Newsweek.

What Happens Next?

The Republican-led House of Representatives voted 357 – 70 on January 31 to pass the bill, sending it to the Senate.

Some lawmakers still want to see changes made to the bill. West Virginia Republican Sen. Shelley Moore Capito said: “I think they need to move it through finance and have an amendment process without having everything all pre-decided. That’s what bothers people when they’re trying to make policy, they don’t have any opportunities to weigh in. So I’m for the committee process. Bring it over and let it go through committee.”

Indiana Republican Sen. Todd Young said he hoped there would be changes made to the bill before it reaches the floor, although he did not elaborate on what he would like to see dropped or included, according to NC Newsline.

“We’re still hoping to make improvements. I’m not going to elaborate,” he reportedly said.

The bill will need 60 votes to pass in the Democrat-led Senate. A schedule for a vote has not yet been decided. Wyden, chairman of the Senate’s tax-writing committee, said he will be talking with Senate leader Chuck Schumer to determine if there will be amendment votes, according to a report by NC Newsline.

When Would Changes Be Implemented?

Last week the Internal Revenue Service (IRS) said any funds could be issued within six to 12 weeks of the bill’s potential passage and that taxpayers should not delay completing their tax returns, even with changes on the horizon.

IRS Commissioner Danny Wefel told lawmakers on Capitol Hill on February 15: “We may be able to start implementations [as] early as six to 12 weeks after passage, depending on the bill’s final language, but taxpayers should not wait for this legislation to file their returns. We will take care of getting any additional refunds to taxpayers who have already filed. They won’t need to take additional steps.”

How Many Would Benefit?

According to analysis by the Center on Budget and Policy Priorities (CBPP), around 16 million children will benefit from the bill in the first year alone, including 3 million children under the age of 3.

The center’s senior policy analyst George Fenton said in a release sent to Newsweek: “When the expansion is fully in effect in 2025, it would lift some half a million or more children above the poverty line and provide financial support to about 5 million more children in families with incomes below the poverty line.”

The CBPP’s vice president of federal tax policy, Chuck Marr, previously told Newsweek: “This bipartisan proposal rightly focuses on the roughly 19 million children who today are left out of the full child tax credit because their families’ incomes are too low. This proposal would increase the credit for more than 80 percent of these children—about 16 million children—lifting as many as 400,000 children above the poverty line in the first year and making an additional 3 million children less poor.”