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It’s something many parents are holding out hope for.
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In 2021, the Child Tax Credit got a major boost as part of the American Rescue Plan, the massive stimulus bill that also put $1,400 stimulus checks in Americans’ bank accounts. President Biden initially hoped to keep the expanded credit in place for 2022, but that didn’t end up happening. And not surprisingly, many households with children struggled financially once the Child Tax Credit reverted to its former value, especially in light of rampant inflation.
But President Biden just revealed his new budget proposal, and one of its provisions includes an expansion of the Child Tax Credit yet again. And while his proposal is pretty unlikely to go through, the fact that he hasn’t given up on the boosted Child Tax Credit should give struggling parents a reason to be hopeful.
A boost so many parents miss
Biden’s budget proposal includes an expanded Child Tax Credit with a maximum value of $3,000 for children ages 6 and over, and $3,600 for children under 6. These are the same maximum values the credit had in 2021, when it not only increased, but got partially paid in the form of monthly installments so parents didn’t have to wait to file their taxes to get their money.
Right now, the Child Tax Credit maxes out at $2,000 for eligible children of all ages. So Biden’s increase, if it were to go through, would no doubt help many parents shore up their finances and better manage their expenses, especially at a time when living costs have risen to such a drastic degree.
In addition to boosting the Child Tax Credit, Biden’s budget also looks to make health insurance premium tax credits permanent, strengthen Medicare’s ability to negotiate drug prices so savings can be passed along to enrollees, and expand Medicaid home and community-based services. To achieve all of these goals, though, Biden is seeking to raise taxes. And that’s where things get hairy, namely because many lawmakers are apt to be opposed to that idea.
Specifically, Biden is seeking to impose a 25% minimum tax on the nation’s wealthiest earners and a 28% corporate tax rate. He’s also looking to impose a top marginal tax rate of 39.6% on single tax-filers earning more than $400,000 a year and married couples earning more than $450,000 per year. Right now, the top marginal tax bracket is 37%.
What if Biden’s proposal fails?
Let’s be clear — Biden’s budget proposal is unlikely to pass in a Republican-controlled House. But that doesn’t necessarily mean a boosted Child Tax Credit is off the table.
Many lawmakers have been advocating to bring the enhanced version of the credit back since it went away at the start of 2022. And they’ll likely continue to do so. So while it’s unlikely that lawmakers will approve a budget that hinges on so many drastic tax proposals, it doesn’t mean parents won’t one day see the Child Tax Credit get a nice boost — one that helps them manage the ever-rising cost of raising kids.
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