This is how much the Child Tax Credit could increase in 2024
The House of Representatives has approved an expansion of the Child Tax Credit which would increase the amount of the refund beneficiaries will receive.
The House of Representatives has approved a bipartisan agreement that, among other measures, includes expanding the Child Tax Credit (CTC) starting this season of taxes in 2024.
Although members of Congress have already approved the agreement known as The Tax Relief for American Families and Workers Act of 2024, it still must pass the Senate and later be signed into law by President Joe Biden.
If the legislation is approved, one of the main changes is to increase the repayable amount of the credit, in addition to adjusting it to inflation.
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How much is the proposed amount of the child tax credit in 2024?
Under current law, the child tax credit is up to $2,000, but the maximum refundable amount is limited to $1,600 per child for tax year 2023. If the new law is approved, the maximum refundable amount per child would be $1,800 for fiscal year 2023, $1,900 in fiscal year 2024 and $2,000 in fiscal year 2025. In addition, the amount would be adjusted for inflation.
The agreement also states that the value of $2,000 of the child tax credit would be adjusted for inflation in tax years 2024 and 2025, rounded down to the nearest $100.
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Other changes to the Child Tax Credit
Under current law, the maximum refundable child tax credit for a taxpayer is calculated by multiplying that taxpayer's earned income (exceeding $2,500) by 15%.
With the new law, the calculation of the maximum amount of refundable credit would be modified. Taxpayers must multiply their earned income (over $2,500) by 15% and then multiply that amount by the number of qualifying children. This policy would be effective for fiscal years 2023, 2024 and 2025.
For tax years 2024 and 2025, taxpayers could, at their option, choose the previous year’s income if it is greater than the current one to calculate their child tax credit and be able to receive more money.
The 2024 tax season, during which the 2023 fiscal year return is filed, began on January 29 and is scheduled to end on April 15. As such, there is still time for the law to be approved and taxpayers to be eligible for the modified Child Tax Credit benefit.