On Thursday, four months after the American Rescue Plan was signed into law, American families having children under the age of 18 were credited with their first monthly Child Tax Credit payments.
The Department of Treasury estimates that $15 billion were distributed to tens of millions of working families with 60 million children as part of the expanded child tax credit.
86 percent of families using direct deposit received their child payment on July 15, and will receive the rest of the tranches on the 15th of every month for the rest of 2021. It will show up in their bank accounts described as “ChildCTC.” Others will receive their check in the mail, the White House said.
The American Rescue Plan is providing the largest-ever Child Tax Credit – increasing from $2,000 per child to $3,000 per year for each child between the ages of 6 and 17, and to $3,600 for each child under the age of 6.
The White House said the one-year expansion of the Child Tax Credit scheme will provide middle-class families with critical tax relief and will lift millions of children out of poverty.
Nearly all middle-class families will receive the expanded child tax credit, to help them meet the costs of raising children.
All families with an income of up to $150,000, where a married couple are filing jointly, will get the full Child Tax Credit.
In the case of a family with a single parent, an income of up to $112,500 will be considered as benchmark for child tax credit eligibility.
Eligible families will receive monthly payments of the Child Tax Credit automatically if they filed taxes in the last two years.
For a married couple earning a combined $60,000 per year with two children under age 6, their Child Tax Credit will equal $7,200, providing an additional $3,200 tax cut in 2021 thanks to the expansion.
The Treasury Department estimates that over 97 percent of families that will receive the expanded Child Tax Credit are working families with wages or self-employment income.
The hard-pressed low-income families of more than 26 million children that previously would have gotten a smaller Child Tax Credit than families with higher earnings will now receive the full expanded Child Tax Credit, according to the Treasury estimates.
Experts project that the American Rescue Plan could cut child poverty by around half driven by the expanded Child Tax Credit.
The American Rescue Plan’s expanded Child Tax Credit is implemented only for 2021. President Biden is proposing that the new Child Tax Credit should be extended for years to come by including it in his American Families Plan and Build Back Better agenda.
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