How much money can you get from stimulus checks and the Child Tax Credit?
President Biden's $1.9 trillion relief bill included a round of stimulus checks and an overhaul of the Child Tax Credit system worth thousands of dollars to the average family.
When he took office in January, one of President Biden’s first legislative priorities was to pass a large-scale relief bill that would form the first stage of his administration’s covid-19 recovery efforts.
He announced details of the American Rescue Plan shortly before entering the White House but it wasn’t until 13 March that he was able to sign it into law after protracted negotiations in Congress. Without any Republican support in the Senate Biden was forced to push the package through using reconciliation.
The $1.9 trillion stimulus package was one of the largest of its kind in American history and it provided direct support in the form of stimulus checks and the reformed Child Tax Credit. In total, these two programmes alone could be worth over $12,000 to a typical family.
How much direct support was introduced by the American Rescue Plan?
Two of the most notable elements of the recent relief bill were the stimulus checks and the monthly payments for Child Tax Credit recipients, both of which were more generous than their predecessors.
The third round of stimulus checks provided $1,400 for individual taxpayers with an Adjusted Gross Income of less than $75,000 and $1,400 each for married couples earning less than $150,000. For the first time adult dependents, such as college students, elderly relatives and disabled adults, will also be entitled to the payments. Child dependents are still eligible for the full amount.
The Child Tax Credit nearly doubles the maximum amount on offer for parents, with children under the age of six receiving an annual total of up to $3,600. Children aged between six and 17 will receive a maximum of $3,000 per year.
As part of the new system the IRS has begun automatically sending out the first wave of monthly payments; $300 for children younger than six and $250 for those aged between six and 17. These payments will continue for the rest of 2021, at which point the remaining six months of payments will be issued as a single tax credit to reduce the household tax bill or to increase the size of the tax refund.
How much will all these payments be worth to a typical American family?
The typical size of the American family is shrunk significantly since 1960 when the average family had 2.33 children. Statista report that the average family in 2020 had 1.93 children, so we can assume that a two-child household is the most common.
For a family like this (two parents who file taxes jointly, and two children under the age of 18) the American Rescue Plan was a very lucrative piece of legislation. If there was one child younger than six and one older, then they should receive the following in the 12 months after the bill was passed:
Stimulus checks: $1,400 x4 = $5,600
Child Tax Credit monthly payments for child younger than six: $300 x6 = $1,800
Child Tax Credit monthly payments for child older than six: $250 x6 =$1,500
Child Tax Credit end of year tax reduction: $1,800 + $1,500 = $3,300