President-elect Joe Biden's stimulus proposal includes a bevy of tax credits aimed at stabilizing the finances for American families.
Biden's pandemic aid plan, which he unveiled Thursday night, calls for an expansion of key tax credits families currently receive to help contend with the cost of raising children.
"In the world of people who care about low-income children, this is really big news," said Elaine Maag, principal research associate at the Urban-Brookings Tax Policy Center.
Here's what's in Biden's proposal, according to a briefing document distributed prior to the speech.
The president-elect wants to increase the child tax credit to $3,000 for qualifying children aged 17 and under. Kids under age 6 would be eligible for a $3,600 credit.
Biden is calling to put these expansions into effect for the year on an emergency basis.
In comparison, families can currently claim up to $2,000 per child under age 17.
To further benefit low-income families, Biden also wants to make the child tax credit fully refundable. That means taxpayers get a refund check, even if the credit exceeds their tax liability.
This is a significant development because right now, the credit right now is only partially refundable – up to $1,400.
"This proposal recognizes that we ought to be giving the largest amounts of money to very low income children, not higher income children," Maag said.
"Rather than phasing the credit in and allowing only part of it to be received as a tax refund, every low-income child is eligible for the maximum credit," she added.
Biden called on Congress to boost the child and dependent care tax credit for one year, also on an emergency basis.
He wants to revamp the credit. This way, families that pay for childcare for kids under age 13 can get a credit of up to $4,000 for one kid or $8,000 for two or more children.
This credit will be refundable, which also puts more money into the pockets of low-income families.
Families making between $125,000 and $400,000 will receive a partial credit.
Currently, the child and dependent care tax credit is nonrefundable and it can be valued at up to $1,050 per child under age 13 or $2,100 for two or more kids under age 13.
The president-elect sought a one-year expansion of the earned income tax credit, a refundable credit available to low-income workers.
"This is sort of the only group of people that's taxed into poverty with federal income and payroll taxes," said Maag of the Urban-Brookings Tax Policy Center. "They qualify for a small earned income tax credit."
Biden wants to raise the maximum earned income tax credit for childless adults to close to $1,500. Currently, this credit tops out at $538 for taxpayers with no qualifying children.
He also wants to raise the income limit for the credit to approximately $21,000 from about $16,000.
Finally, the president-elect wants to make the credit available to older workers, so he's proposing the elimination of the 65-year age cap.
This is a breaking news story. Please check back for updates.