CNN
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The popular child tax credit has become a key issue in this year’s presidential election, with each party vying with the other on who is best for families.
Democratic presidential candidate and Vice President Kamala Harris has made an increase to the child tax credit a centerpiece of her recently released four-part policy platform to ease the burden on American families, which also includes measures to make housing, groceries and prescription drugs more affordable. VP Harris wants to restore the maximum $3,600 per child credit that was strengthened in the American Rescue Plan Act of 2021 for only one year, and create a $6,000 credit for newborns.
Meanwhile, Sen. J.D. Vance of Ohio, the Republican vice presidential nominee who has repeatedly said Democrats are anti-family, told CBS News earlier this month that he wants to increase the child tax credit to $5,000 per child, but he needs to see how “feasible” that is in Congress. Former President Donald Trump, the front-runner for president, whose daughter Ivanka successfully pushed for an expansion of the credit during his first term, suggested in a separate CBS News interview this month that he supports a generous child tax credit.
“Campaigns are looking for popular, populist policies,” said Josh McCabe, social policy director at the right-leaning Niskanen Center think tank, noting that an increase to the child tax credit would be most palatable to voters. The credit also isn’t tied to a specific need, like the child support credit. “With the child tax credit, families think they can spend it however they want.”
Vance and Democrats have also been engaged in a fierce battle over the credit, with Vance, the vice presidential candidate, falsely claiming that Harris wants to eliminate the benefit and Democrats attacking him for missing a recent vote that would have temporarily expanded the credit.
Whoever wins the White House will have to deal with the child tax credit next year, as it is scheduled to be reduced to $1,000 in 2026 from the current $2,000 cap set in the Republican Tax Cuts and Jobs Act of 2017. The credit is one of many individual income tax provisions in the law that expire at the end of 2020. next year.
Here’s what you need to know about the child tax credit.
The child tax credit, claimed by about 46 million families in 2022, was approved by a Republican-led Congress and signed into law by then-Democratic President Bill Clinton in 1997. It was a relatively modest tax credit for middle-income families designed to ease the financial burden of having children, said Margot Crandall Holick, a senior fellow at the nonpartisan Tax Policy Center.
“The child tax credit is attractive to families and therefore to politicians,” she said, noting that in 2022, nearly 90% of families with children received the credit.
Initially, the credit, up to $500 per child, was nonrefundable, so parents had to earn enough to pay federal income tax to qualify for it, but the credit began to phase out for single taxpayers earning more than $75,000 and married couples earning more than $110,000.
Since then, the credit has been expanded in a number of ways, including increasing it to a maximum of $2,000. The credit is also now partially refundable, so low-income families can still get a portion of the credit if they make more than $2,500 even if they don’t pay federal income tax. And the credit phases out for single parents making $200,000 and married couples making twice that amount, so more high-income families are eligible.
But unless Congress acts, that will all change after 2026, when the $1,000 maximum credit and phase-out floor will be reinstated. In addition, low-income households will need to earn at least $3,000 to qualify.
What the candidate wants to do
Harris would revive an expanded version of the American Rescue Plan that would significantly expand the child tax credit and make it fully refundable, opening the credit up to millions more low-income families.
The COVID-19 relief law increased payments to low- and moderate-income families in 2021 to up to $3,600 per child up to age 6, and $3,000 per child between ages 6 and 17. In addition, for the first time, half of the credit was paid in monthly installments from July to December of the same year to help families cover expenses, and the other half could be claimed by parents on their 2021 tax returns.
The enhanced measures cut the child poverty rate by nearly half in 2021 and lifted 2.1 million children out of poverty, according to the U.S. Census Bureau, but the poverty rate returned to nearly pre-pandemic levels the following year.
Harris would also add a $6,000 credit for children in their first year of life to cover expenses like car seats and diapers, though she did not specify the income threshold for the credit.
“Another way we’ll help families deal with rising costs is to help them keep more of their hard-earned money,” Harris said in a recent economic policy speech, which her campaign noted would provide tax cuts to more than 100 million Americans.
Vance, meanwhile, did not provide details about the increased credit. CBS News “Face the Nation with Margaret Brennan” The $5,000 deduction should be available everywhere.
“I don’t think you want the same kind of big cuts to low-income families that we have now,” he said. “You don’t want different policies for higher-income families. All you want is a child tax credit that favors families.”
Asked in a separate interview by CBS News whether he supported raising the tax credit to $5,000, as proposed by his running mate, Trump said he was in favor of “best efforts” to do so but noted it would have to be negotiated through Congress.
The cost of expanding the credit line has also been a point of contention among lawmakers as the national debt continues to grow. Harris’ proposal could add about $1.2 trillion to the federal deficit over the next decade, while Vance’s plan could cost $2 trillion to $3 trillion over that same time frame, said Mark Goldwein, senior policy director at the Committee for a Responsible Federal Budget. Goldwein said that estimate could change as the candidates release details of their proposals.
President Joe Biden and Democratic lawmakers have tried unsuccessfully to extend the expansion or pass a smaller expansion for 2021. Senate Republicans earlier this month rejected a bill that would have expanded tax credits for low-income families and restored some tax breaks for businesses, a measure that had won bipartisan approval in the House earlier this year.
