Democrats Propose Dramatic Expansion Of The Child Tax Credit

Turn down the lights. Turn up the Marvin Gaye. It’s baby-making time.

Look, I get it. You’re not accustomed to reading an article about the intricacies of the tax law and walking away ready to throw down. But this time is different.

This week, the House of Representatives will vote on the latest round of COVID relief, and should it pass both chambers and be signed into law, there will suddenly become a MUCH bigger tax break for adding a member to the family. But there’s a catch: this new incentive will only be in place for 2021, which according to my calendar, has only ten months remaining. And since it takes a full nine months to go from copulation to childbirth, time is of the essence.

To understand what’s at stake, let’s take a look at the current construction of one of the primary tax benefits of having a kid – the child tax credit (CTC). Then, we’ll layer on how the credit will change for 2021 if the American Rescue Plan – President Biden’s $1.9 trillion stimulus package – becomes law.

Current Child Tax Credit Rules 

The CTC has been around since 1997, and its purpose is clear: Congress recognizes that taxpayers with children have to pay for necessities like food, clothing, and Nintendo Switch V-Bucks, leaving less cash lying around to satisfy their annual income tax bill. As a result, as the law stands today, taxpayers may claim a CTC of up to $2,000 for each child who hasn’t turned 17 by the end of the year. As a reminder, a credit results in a dollar-for-dollar reduction in your tax liability.

Example. H&W have two children, ages 2 and 5. H&W have a tax liability of $10,000 before credits. After reduction for the $2,000 CTC that H&W can claim for each child, their final tax liability will be $6,000.

But what if H&W’s tax bill is only $1,000 before the $4,000 credit? After 2017, up to $1,400 of the $2,000 CTC is now refundable. The refundable portion is generally capped at 15% of the excess of earned income over $2,500.


Help FAIRtax Become The Number One Issue in 2021

Enacting the FAIRtax must be a prominent topic in these times. We did it before, we can do it again, but we need your help!

Your gift of $25, $50, $100 – even $1,000 or more if you can possibly spare it – will help bring an end to the IRS and promote a FAIRtax. So, I urge you, please give as generously as you can.
To donate by check:
Americans for Fair Taxation
PO Box 4929
Clearwater, FL 33758

If you need to make changes to your existing Monthly Re-Occurring Donation with new card or billing address information, then Please call Adam Yomtov our New York State Co-Director. He is assisting with the administration of our donations, technology services, and website.

Please note: Inputting your new information at our website won't update your donation. The only way to update is by calling Adam Yomtov 917-689-3931 mobile.

Americans for Fair Taxation® is a 501(c)(4) non-profit, non-partisan grassroots organization solely dedicated to replacing the current income tax system with a fair, simple and transparent national consumption tax – the FAIRtax® Plan. We rely entirely on contributions from concerned citizens like you who want a tax system that will generate jobs and stimulate the economy. Welcome to the FAIRtax team!