There’s new optimism the $300 monthly child tax credit checks can be renewed — but the relief may look different

Personal finance

Parents and caregivers with the Economic Security Project gather outside the White House to advocate for the Child Tax Credit in advance of the White House Conference on Hunger, Nutrition, and Health on Sept. 20 in Washington, DC.
Larry French | Getty Images Entertainment | Getty Images

When Natacha Chavez began receiving monthly child tax credit payments last year, it added $500 per month to her family’s budget.

The funds enabled her to take care of needs like a new prescription for her son’s eyeglasses that she might otherwise have put off.

But like millions of other Americans, her family received their last monthly check in December when those payments expired.

Having the extra income would have helped this year, as Chavez was temporarily without a job and prices at the grocery store and gas pump soared.

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“Every once in a while, I keep thinking about how this extra money would have helped offset inflation,” she said.

Chavez, a Democratic political campaign organizer, has been active in promoting renewal of the payments for families who need the money even more than hers.

But amid the ongoing pandemic, record high inflation and economic uncertainty, it has felt like a long haul.

“At this point, I feel like we’ve been in this fight for the renewal of it for longer than it’s been around,” Chavez said.

How the enhanced child tax credit worked

The child tax credit was temporarily expanded through the American Rescue Plan Act in 2021. The existing credit of $2,000 per child under age 17 was increased to $3,600 per child under 6 and $3,000 per child ages 6 through 17.

Half of the enhanced sum was made available through monthly payments starting last July — up to $300 per child under 6 and up to $250 per child under 18.  Families could claim the remaining money when they filed their tax returns for the year.

Democrats had hoped to renew the more generous credit this year. But key legislation they hoped to pass through a one-party majority — Build Back Better — fell apart. Democratic Sen. Joe Manchin of West Virginia opposed renewing the payments without additional work requirements.

Now, Democrats and advocates are hoping to get one more go at renewing the enhanced child tax credit this year.

“I feel better about it than I have at any point in 2022,” said Adam Ruben, campaign director at the Economic Security Project, an advocacy organization that promotes extending economic power to all.

A number of signs are pointing to new momentum, according to Ruben.

New signs show promise

President Joe Biden called the enhanced child tax credit “one of the most effective programs we’ve ever seen” at the recent White House Conference on Hunger, Nutrition and Health.

“That’s why my national strategy calls on Congress to expand the child credit permanently,” Biden said.

“We’ll get it done this time,” he added.

Recently released Census data shows the credit expansion helped reduce child poverty by more than 40%. That prompted Democratic lawmakers such as Sens. Michael Bennet of Colorado, Sherrod Brown of Ohio and Cory Booker of New Jersey to call for extending the enhanced credit before year-end.

President Joe Biden speaks at the White House Conference On Hunger, Nutrition And Health in Washington, D.C., on Wednesday, Sept. 28.
Bloomberg | Bloomberg | Getty Images

The post-election period could be a key opportunity for revisiting the proposal, experts say.

There is more optimism compared to last year, as lawmakers eye a year-end tax deal to revisit corporate tax cuts put in place in 2017. Advocates hope an enhanced child tax credit can be included in that package.

“No more tax breaks for big corporations and the wealthy unless the child tax credit is with it,” Brown said in a recent interview. “And I will lay down in front of a bulldozer on that one.”

Child poverty reductions key to success

A few key features were behind the success of the 2021 credit, according to Elaine Maag, senior fellow at the Urban-Brookings Tax Policy Center.

In addition to the higher credit amounts and monthly payments, the credit was also made fully refundable. That made it possible for low-income households to access the full credit.

Experts say when lawmakers negotiate on new terms, an enhanced child tax credit may not be as generous as the 2021 pandemic-era relief.

“If I could only have one thing, I would want to make sure the very lowest-income children receive the full benefit of the credit,” Maag said.

Parents and children participate in a demonstration organized by the ParentsTogether Foundation in support of the child tax credit portion of the Build Back Better bill outside of the U.S. Capitol on Dec. 13, 2021.
Sarah Silbiger | Bloomberg | Getty Images

The 2021 child tax credit expansion was particularly instrumental in reducing poverty among Black, Latino and Native American children, according to the Center on Budget and Policy Priorities.

Now, child poverty is poised to increase relative to last year, according to Kris Cox, deputy director of federal tax policy at CBPP.

“Policymakers have a real choice here whether they take action and stem some of the rise in poverty,” she said.

How work requirements may be different

Work requirements may be a sticking point in the negotiations between the parties. Republican Sens. Mitt Romney of Utah and Marco Rubio of Florida have each put forward proposals that come with income rules.

The full child tax credit benefit per Romney’s plan would be available to families who meet a $10,000 earnings threshold. Rubio’s bill makes it so the credit cannot exceed a family’s payroll and income tax liability.

The goal of the Republicans’ plans is to promote workforce participation so everyone who wants jobs can get them, thereby preventing poverty that way, said Shai Akabas, director of economic policy at the Bipartisan Policy Center.

“There’s still a pretty big gap between what Democrats are calling for and what most Republicans seem ready to support,” Akabas said.

Advocates for renewing the expanded child tax credit point to the need demonstrated by the data.

“It would be unconscionable for Congress to leave at the end of this Congress, at the end of this year, go home on vacation and leave working families hanging,” Ruben said.

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