Child Tax Credit Expansion for 2025

A new proposal from the Biden-Harris administration outlines plans to bring back coronavirus-era child tax credit expansions.

As part of the budget proposal for the fiscal year 2025, President Biden announced his intention to restore expanded child tax credits that were first enacted as part of the American Rescue Plan. The expanded child tax credit, in place during the coronavirus pandemic, saw American families receive boosted credit through monthly advance payments instead of waiting until tax filing season for their refunds.

According to the budget text, when the expansion was still in place, it “cut child poverty nearly in half in 2021 to its lowest level in history.” Child poverty in the U.S. hit a low of 5.2 percent in 2021 and rose to 12.4 percent in 2022 after the expansion ended, per the U.S. Census Bureau.

The Biden administration said it would expand the child tax credit from $2,000 per child to $3,000 for those aged six and above, and to $3,600 for children under six. It will also make the credit fully refundable and return to distributing the refund as monthly advance payments as a permanent change.

This would lift “3 million children out of poverty” and cut “taxes by an average of $2,600 for 39 million low- and middle-income families that include 66 million children,” according to a press release issued by the White House.

White House Press Secretary Olivia Dalton said Biden’s “budget invests in all of America to make sure everyone has a fair shot and we leave no one behind.”

Boosting child tax credits is largely supported by Americans according to recent polling conducted exclusively for Newsweek by Redfield and Wilton Strategies. The poll conducted on March 2 surveyed 1,500 eligible American voters. It found that 26 percent strongly supported the reinstatement of COVID-era child tax credits, with 54 percent overall saying they agreed with the idea.

Those who voted Democrat in the 2020 presidential election were more likely to back the reinstatement at 34 percent than their Republican counterparts, at 23 percent.

The polling also found that 61 percent of respondents favored a $79 billion bipartisan package passed by the House of Representatives earlier this year, which is currently being considered in the Senate.

The Tax Relief for American Families and Workers Act of 2024 would incrementally raise the refundable portion cap of the child tax credit from $1,800 in 2023 to $2,000 in 2025. It would also remove current penalties for larger families.

Analysis conducted by the Center on Budget and Policy Priorities found that around 16 million children would stand to benefit from the Tax Relief for American Families and Workers Act in its first year, including 3 million children under three years old.

The CBPP’s vice president of federal tax policy, Chuck Marr, 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.”