Child Tax Credit: when will I get the monthly payments, who is eligible and for how long does it extend?
In a White House speech President Biden confirmed that the new support for families will arrive in July, but who will get the monthly direct payments?
On Monday President Joe Biden announced that the new Child Tax Credit programme included in his American Rescue Plan will come into effect from 15 July, meeting the initial target to get the system up and running.
The tax credit has been completely overhauled to provide a monthly direct payment into the accounts of eligible parents. In the past, the Child Tax Credit had simply been an annual tax refund that allowed parents to reduce their tax bill by up to $2,000.
The Biden administration hopes that the additional support will make a significant difference to low-income families and will reportedly halve the number of children in poverty over the next 12 months.
Biden to American families: “Help is here”
The Child Tax Credit announcement was one of the main takeaways from a Biden press conference on Tax Day 2021. Monday 17 May is the last day to get your tax returns in to the IRS before the deadline, and it is the tax authority who will be overseeing distribution of the new monthly payments too.
The new system will play a central role in Biden’s effort to tackle income inequality in the United States and is slated to provide support to 39 million households. Speaking to reporters on Monday, Biden said: “This tax cut sends a clear and powerful message to American working families with children. Help is here.”
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The new programme will see the IRS send monthly payments worth up to $300 for children aged less than six, and $250 for those aged between six and 17. Individuals earning less than $75,000 or married couples earning less than $150,000 will be entitled to the full amounts, with the amount on offer gradually decreasing for higher-income households.
How long will the new Child Tax Credit last for?
The American Rescue Plan provided federal funding to cover 12 months of the new programme, but the Biden administration is eager to extend to provision beyond then. A group of Democratic senators led by Michael Bennet, Colorado; Sherrod Brown, Ohio; Rosa DeLauro, Connecticut and Cory Booker, New Jersey have also called for the scheme to be made permanent.
Biden has not gone so far as to make it permanent but the American Families Plan announced earlier this month included a four-year extension to the Child Tax Credit programme. This would see the monthly direct payments continue until the end of 2025, if the legislation is passed by Congress.
Speaking at the White House today, Biden said: "While the American Rescue Plan provides for this vital tax relief to hard working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come.”