Personal Finance

House Democrats propose extending expanded child tax credit through 2025. Advocates hope it's a step toward making it permanent

Key Points
  • The expanded child tax credit has given millions of families monthly checks of up to $300 per child.
  • Those payments are currently set to continue through December.
  • Now, House Democrats have proposed continuing those monthly checks through 2025.
  • They are also calling for making a feature that makes the credit available to low to no income families permanent.
Families with school-aged children shouldn't bank on spending time this summer in the countries opening to vaccinated travelers.
Jordan Siemens | Stone | Getty Images

House Democrats have unveiled a proposal to continue the expanded child tax credit through 2025.

While one advocacy group, MomsRising, is "thrilled" with that development, executive director Kristin Rowe-Finkbeiner said the group hopes to see the expanded credit made permanent.

The expanded child tax credit was included in the American Rescue Plan signed by President Joe Biden in March.

Qualifying families may now receive up to $3,600 per child under the age of 6 and $3,000 for those ages 6 to 17. That's up from $2,000 per child, provided families fall under certain income thresholds ($150,000 for married couples, $112,500 for those who file as heads of household and $75,000 for those who file a separate return).

Monthly payments of up to $300 per child under age 6 and $250 per child ages 6 to 17 began in July.

Those monthly checks are set to continue to the end of the year. The second half of the sums will be credited to families when they file their taxes this year.

The legislation also made the credit fully refundable, meaning even families with little or zero income now also qualify.

In their proposal released Friday, House Democrats sought to make the refundability feature of the credit to those families permanent.

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Child tax credit is a catalyst for consumer spending

The Democrats' proposal seeks to extend the expanded credit amount and monthly payments through 2025, when some other tax provisions will expire.

To be sure, the terms of any extension could change as lawmakers on Capitol Hill race to finish a host of legislative efforts this month. The upcoming $3.5 trillion spending bill has emboldened Democrats to try to push through some key items on their agenda, including the child tax credit, through so-called budget reconciliation, or a simple Senate majority.

Republicans have indicated they do not support the child tax credit proposal.

In an announcement issued last week, House Ways and Means Republicans sought to refute some of Democrats' claims regarding the credit.

"Democrats have turned the Child Tax Credit into Welfare Without Work, which if they make permanent will harm families, risk the loss of billions of taxpayer dollars in waste and fraud, and cost American jobs," a release stated.

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The Tax Cuts and Jobs Act, which was led by Republicans and passed by Congress in 2017, raised the maximum child tax credit to $2,000 per child under the age of 17, up from $1,000.

Advocates like MomsRising say the newly expanded child tax credit should continue beyond this year.

"The child tax credit expansion has made historic gains for our families and our economy in 2021, lifting 50% of all children out of poverty and boosting the economy," Rowe-Finkbeiner said.

Research from the Center on Budget and Policy Priorities has found that the American Rescue Plan will help reduce child poverty by more than 40%.

The fact that the child tax credit is now fully available to families regardless if their income accounts for 87% of its anti-poverty effects, according to the Center.

"In the forthcoming recovery legislation, policymakers should finish the job by making this improvement permanent," the Center on Budget and Policy Priorities researchers wrote this week.

Parents with low to moderate income have spent the initial payments on food, utilities, clothing and housing, the Center said, citing early data.

House Speaker Nancy Pelosi, D-Calif., and Rep. Jimmy Gomez, D-Calif., at a press conference about the child tax credit at the Barrio Action Youth and Family Center in Los Angeles on July 15, 2021.
Mario Tama | Getty Images

MomsRising, which Rowe-Finkbeiner says has been advocating for an expanded child tax credit for "years and years," agreed.

"We don't want to make historic gains for our children and our economy, only to have them end," she said.

"We are thrilled that the expansion of the child tax credit is on a path to continue past 2021 and ultimately we would like to see the child tax credit expansion made permanent," she said.