Average Family to See $2,000 More From Child Tax Credit
Number of the Day: The most relevant or interesting figure in personal finance
That’s how much the average taxpayer with children (including heads of household and married couples) will receive from this year’s newly expanded child tax credit—$2,000 more than last year, according to one analysis.
The American Rescue Plan pandemic relief bill made several major (though temporary) changes to how the credit works for the 2021 tax year. It increased the benefit from $2,000 to $3,000 or $3,600 per child (depending on age,) extended eligibility to families that had too little income to claim its full value before, and authorized distribution of part of the credit in advance, through monthly payments set to begin in July.
Under the old system, millions of families didn’t get the full credit—or in some cases any credit at all—because they didn’t make enough money to warrant an offset of taxes. This restriction has been removed for 2021, and Democratic lawmakers hope to make that and other changes permanent. Conservatives, however, oppose the expansion, citing the cost and potential that the lack of income restrictions will discourage people from working.