by Natasha Gabrielle | Updated July 25, 2021 - First published on May 5, 2021
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Could the expanded child tax credit be extended through 2025?
Last week, President Biden announced the American Families Plan. Families often struggle with everyday expenses, and this plan hopes to address some of their financial concerns.
In fact, part of Biden's plan proposes extending the increased child tax credits through 2025. Keep reading to learn more about what this could mean for American families in the future.
The recently passed American Rescue Plan temporarily expanded the Child Tax Credit to include 17 year olds. It also increased the credits available per child. For the tax year 2021, families are able to receive the following tax credits:
Half of the tax credit would be paid out in advance monthly from July through December 2021. The rest would be claimed as a one-time credit when filing 2021 taxes.
The full tax credit is available for the following income levels:
If a household exceeds these income limits, the credits will be reduced.
With the American Families Plan, Biden wants to extend the increased tax credits through 2025. The plan also calls for the Child Tax Credit to be permanently fully refundable and for payments to be made regularly.
Biden's American Families Plan also includes measures that expand on his commitment to reduce poverty and better equip children for the future. Here are some ways his plan outlines additional ways to combat poverty and better support low- and middle-income families:
The American Families Plan still needs to be approved by Congress, and it's unclear if this is possible. The package comes with a hefty price tag of $1.8 trillion, which could be a major concern for both sides of the aisle.
For this package to pass, it might need strong bipartisan support. The Democrats control 50 seats in the Senate and would need at least 10 Senate Republicans to vote in favor. However, given Republican opposition, this could be tough.
Another way the American Family Plan could become a reality is through budget reconciliation. This alternative is a complex process that allows federal spending bills to get through the Senate with a simple majority vote. But there's a limit on the number of times this can happen, and certain Democrats may not be on board with this option. So we will have to wait and see what developments occur.
If your family is struggling with finances due to the pandemic, you're not alone. We have outlined coronavirus resources that may be of help. You can also access personal finance resources that may provide ways to help improve your family's financial situation.
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