The expansion of the Child Tax Credit program transformed the credit into a direct monthly payment aimed at providing greater support to working families.
On Wednesday, April 28, President Joe Biden delivered his first address to a joint session of Congress since taking office. Among the new announcements made by the president was the American Family Plan (AFP) where he announced the extension of the Child Tax Credit (CTC) from the American Recovery Plan that was signed into law in March.
The new legislation transformed the credit into a direct monthly payment for families worth up to $300 per month for children under age 6 and $250 for children between the ages of 6 and 17.
That bill included one year of funding for the new program that was scheduled to end at the end of June 2022. However, the American Families Plan will provide an additional federal spending resource to ensure that the new program can remain in place until at least 2025.
The new tax relief will be refundable on a permanent basis, meaning that even households that pay little or no tax will be entitled to the full relief. However, the new monthly payment system and amount are only guaranteed until 2025.
The White House program notes, “The President is committed to working with Congress to achieve his ultimate goal of making the Child Tax Credit permanent, as well as all of the expansions he signed into the American Recovery Plan.”
The Child Tax Credit is intended to provide greater support for working families.
When will the new child tax credit start?
The extension of the Child Tax Credit program came after a large number of Democratic lawmakers supported the program and White House insiders are confident it will deliver results once it goes into effect.
The Child Tax Credit extension in the American Rescue Plan benefited nearly 66 million children and was the largest contributor to the plan’s historic reductions in child poverty.
Before payments begin starting in June the IRS has to put a distribution system in place. It is expected that payments will be monthly and that the system will be administered through an online portal that must be put in place.
The federal agency is still in the midst of the tax season that will end on May 17. The IRS has been in charge of distributing the third stimulus check for the past few weeks.