Explain Child tax credit increase in 500 words
The Child Tax Credit (CTC) is a tax benefit provided by the government to help families with the cost of raising children. It is designed to reduce the tax burden on families and provide financial support to ensure the well-being of children.
In recent years, there have been significant increases to the Child Tax Credit to better assist families in meeting the expenses associated with raising children. These increases have been aimed at helping families with low to moderate incomes who may struggle to provide for their children's needs.
One of the most significant changes to the Child Tax Credit was introduced in 2017 as part of the Tax Cuts and Jobs Act. Prior to this, the credit was worth up to $1,000 per child under the age of However, the new legislation increased the maximum credit to $2,000 per qualifying child. This increase was intended to provide families with more financial support to cover the costs of childcare, education, and other expenses associated with raising children.
Furthermore, the Tax Cuts and Jobs Act also expanded the income thresholds at which the credit begins to phase out. Previously, the credit began to phase out for married couples filing jointly with an adjusted gross income (AGI) above $110,000 and for single filers with an AGI above $75, However, the new legislation increased these thresholds to $400,000 for married couples filing jointly and $200,000 for single filers. This change allowed more families to qualify for the credit and receive the increased benefits.
In addition to these changes, the American Rescue Plan Act passed in March 2021 brought further enhancements to the Child Tax Credit. Under this legislation, the credit was temporarily expanded for the tax year The maximum credit amount was increased to $3,000 per qualifying child aged 6 to 17 and $3,600 per child under the age of 6. This increase was intended to provide even more financial assistance to families struggling with the economic impact of the COVID-19 pandemic.
Furthermore, the American Rescue Plan Act also made the Child Tax Credit fully refundable for the tax year This means that families can receive the full amount of the credit even if they have little or no tax liability. This change was particularly beneficial for low-income families who may not have been able to fully benefit from the credit in the past.
To further assist families, the American Rescue Plan Act also introduced advance payments of the Child Tax Credit. Starting in July 2021, eligible families began receiving monthly payments of up to $300 per child. These advance payments are intended to provide immediate financial relief to families and help cover the costs of raising children throughout the year.
In conclusion, the Child Tax Credit has undergone significant increases in recent years to better support families in meeting the expenses associated with raising children. These increases have included raising the maximum credit amount, expanding income thresholds, making the credit fully refundable, and introducing advance payments. These changes aim to alleviate the financial burden on families and ensure the well-being of children by providing them with the necessary support to thrive.