- Child tax credits of up to $300 per child per month will start to hit bank accounts on July 15
- President Biden has hailed the monthly cash payments as a new way to help lift millions of children out of poverty
- Vice President Kamala Harris called the credit a game-changer for struggling families because the cash will come in a steady stream, not in a lump sum
- Payments a result of decision to raise the annual child tax credit to a maximum of $3,600 per child per year, from the previous limit of $2,000
- Most low-income and middle-class parents of children under six-years-old will receive a monthly payment of $300 per child up to a total of $1,800 in 2021
- Remaining $1,800 can be claimed by parents on their 2021 federal income taxes
- For children from 6 to 17, the credit is $250 a month for a total of $3,000
- There is no indication of a maximum number of children a family can claim for
- No suggestion that the amount paid out decreases for families with more than one child – each eligible child will result in a family being paid the full amount
- Tax credits will be paid for one year – but Biden hopes to extend scheme until 2025, and could make it permanent
President Biden has unveiled his reformed child tax credits which will see American families paid up to $3,600 to help raise each of their children.
The raise, unveiled as part of Biden’s $1.8 trillion American Families Rescue Plan, will see families with children aged under six receive a monthly payment of $300 per child – equivalent to $3,600 – in 2021.
Families with children aged between six and 17 will receive $250 a month, or $3,000 over the course of a year.
Cash will automatically start hitting the bank accounts of families who have filed 2019 and 2020 federal taxes from July 15. Eligible families previously reclaimed the tax credit back when filing their annual taxes.
The initiative is intended to run for a year, and is intended to lift millions of children out of poverty, with Biden has spoke of extending it to 2025, and hopes it could be made permanent.
Child tax credits were previously capped at $2,000 per child per year. The Biden administration’s raise represents an 80 per cent boost for children under six, and a 50 per cent increase in the child tax credit paid out to parents of children aged between six and 17.
Two parent families on a combined salary of up to $150,000 are eligible for the tax credit. Families with a single ‘head of household’ being paid up to $112,500 a year are also included. A head of household is an unmarried person who covers more than half their family’s living costs, and lives with them for more than half of the year.
Single parents on salaries of up to $75,000 will be paid the new credits too.
Parents will get half the credit they are eligible for in 2021, and will be able to claim the rest back when completing this year’s federal tax return.