Will child tax credit come back in 2024? This is what we know so far
Congress is nearing an agreement that could see the expanded Child Tax Credit partially restored with hopes that it will be available this tax season.
Lawmakers in Congress are closing in on a tax deal that would satisfy both parties’ interests and partially revive the expanded Child Tax Credit. According to reporting in the Washington Post and NBC, the provisions of the deal remain in flux but the parties involved hope to pass the legislation before the start of the 2024 tax season on 29 January.
The $70 to $80 billion package is being hammered out by members of the Democratic-led Senate Finance Committee and the Republican-led House Ways and Means Committee. The deal would extend tax incentives for businesses that were part of the 2017 Trump tax cuts that have expired while making the enhanced tax credit available to more lower-income families that currently can’t claim it.
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Will child tax credit come back in 2024? This is what we know so far
Negotiations on the bipartisan and bicameral deal have been ongoing for the past 18 months Democratic Senate Finance Committee Chair Ron Wyden told NBC.
Proponents of the Child Tax Credit would boost the refundable portion of the tax credit and incrementally lift the $1,600 cap on refundable credits. Taxpayers would also be able to use previous years’ incomes in the case that it would enable them to access larger benefits from the targeted relief. The advance payments that were a feature of the 2021 Child Tax Credit enhancement are not part of the current talks.
“We’re homing in on a very specific target, which is to get this done in time for filing season. And I’m going to pull out all the stops and stay at it every day,” Wyden said.
Current Child Tax Credit and when changes could be implemented
After the expanded Child Tax Credit of 2021 expired that same year, the credit reverted to its previous levels worth up to $2,000 per year. In order to begin being eligible for the refundable portion of the credit, $1,600 in 2023, a taxpayer currently has to have an “earned income” above $2,500 and the amount that one could claim increases incrementally with their income.
IRS Commissioner Daniel Werfel speaking to The Washington Post felt confident that his agency could implement “any late-breaking changes.”
“We are no stranger to late-breaking tax packages that imminently impact the upcoming filing season. Once we have the final details of any such package, we will roll up our sleeves and do what’s necessary to make it work. And so we are standing by, as we do every December and January, to see if there are any late-breaking changes,” he said.