Changes to the child tax credit: What it means for families

Parents will get twice as large of a tax credit for each child next year, under a compromise hammered out by the House and Senate Friday — although other changes to the bill mitigate the impact of that tax break.

The GOP’s tax overhaul bill doubles the current child tax credit from $1,000 to $2,000 per child under age 17, and allows parents to receive up to $1,400 as a refund, if the credit is larger than their federal income tax liability.

The refundable part of the credit was increased from $1,100 to $1,400 after Senator Marco Rubio threatened to vote “no” on the bill, unless it included a more generous child tax credit.

Currently, the child tax credit is $1,000 and only partially refundable. Tax filers can only claim refunds on a percentage of what they make over $3,000, which limits benefits for the lowest-wage households.

The Center on Budget and Policy Priorities, a left-leaning think tank in Washington D.C., calculated that parents of 10 million children would qualify for an additional refund of just $75 or less under the committee’s deal. That’s the same impact as the Senate’s original bill.

The latest version of bill also makes the child tax credit available to high earners because it raises the income threshold under which filers may claim the full credit to $200,000 for single parents, up from $75,000 today; and to $400,000 for married couples, up from $110,000.

[Read More]

Add a Comment

Your email address will not be published. Required fields are marked *