Child Tax Credit 2021: how much you get in the payment will depend on your child's age
President Biden has confirmed that the IRS will begin sending out direct payments in July, but how much will the Child Tax Credit be worth to your family?
On Monday the Biden administration confirmed that the new-look Child Tax Credit programme will be ready to go by 15 July, meeting the original date set in the American Rescue Plan.
The $1.9 trillion stimulus package included federal funding for a complete overhaul of the existing Child Tax Credit, which had previously been paid as a single tax refund or tax deduction to be claimed at the end of each year.
The new system will see the IRS send a monthly direct payment to eligible parents, but the amount on offer varies based on both the age of the child and the parents’ household income.
How much will I get from the new Child Tax Credit?
The new programme is designed to provide a consistent level of financial support to families who may have been struggling with the economic consequences of the covid-19 pandemic. The new system will see the parents of children aged below six receive up to $300 per month, while parents of children aged between six and 17 will get a maximum monthly payment of $250.
This equates to an annual total of up to $3,600 or $3,000, depending on the child’s age; a considerable increase on the one-off $2,000 that was previously offered.
However there are some limits on eligibility for the Child Tax Credit payments and higher-income households will not be able to receive the full amount. As was the case with the first two rounds of stimulus checks, the entitlement will gradually phase out for individuals earning more than $75,000 or married couples with a combined income of more than $150,000.
What impact will the new Child Tax Credit have?
The White House has been optimistic about the positive effect that the new Child Tax Credit will have on American families and has even sought to extend the programme beyond its initial 12-month lifespan. If the American Families Plan is passed by Congress, the monthly payments will continue until the end of 2025.
Speaking from the White House on Monday, Biden told reporters: "The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children. With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July.”
The Biden administration has confirmed that 39 million households are expected to receive Child Tax Credit payments over the next year, covering over 65 million children. The payments will be made on the 15th of each month for the duration of 2021, moving a day earlier or later if the date falls on a weekend or public holiday.