Happy Child Tax Credit Awareness Day! Established by the Biden administration, this commemorative day is meant to boost awareness of the substantial expansion of the Child Tax Credit (CTC) under the American Rescue Plan Act (ARP). These improvements to the CTC will help families cover the costs of raising children, improving families’ economic stability and children’s wellbeing.
As part of the ARP, Congress temporarily increased the maximum CTC amount from $2,000 per child to $3,600 per child for children under 6 years old, and to $3,000 for children between 6 and 17 years old. Prior to the temporary expansion of the Child Tax Credit under ARP, an estimated 27 million children nationwide, including 561,000 in New Jersey, received less than the maximum credit amount or were excluded from the credit entirely because they live in a household with low earnings. Under ARP, the CTC is fully refundable, meaning that households with little or no income can qualify for the full credit amount. An estimated 65.6 million children, including 1.6 million children in New Jersey, will benefit from these improvements to the CTC.
In addition to changes in eligibility and the credit amount, the delivery process for the CTC will now allow families to receive the credit sooner. Instead of waiting for a lump sum at tax time, families will be able to receive advance payments so they can use credit to make ends meet throughout the year. The first payments are scheduled to be distributed in July 2021. Families who have already filed 2019 or 2020 taxes or who signed up to receive stimulus payments will automatically receive their CTC. Families who have not yet filed taxes or who typically are not required to file taxes because their incomes are too low can sign up to receive the CTC through a new online portal.
Expanding relief for families is especially important now as households with children face heightened financial hardship, but many families struggled to make ends meet even before the pandemic. While this historic CTC expansion under ARP will temporarily improve the lives of millions of families, this expansion will expire after one year. To realize the long-term benefits of such improvements, Congress should make the temporary expansions to the CTC permanent. In addition, lawmakers should make the credit more inclusive by expanding eligibility for immigrant children.
To learn more about the Child Tax Credit, visit childtaxcredit.gov.