California families could save thousands under the new Biden child tax plan
The White House’s plan to continue the child tax credit expansion for another year would mean a savings of thousands of dollars in 2022 for the millions of California families with income of less than $151,100.
The plan, which would help families with an estimated 8.16 million California children, is part of a $1.75 trillion framework for a massive budget and tax plan President Joe Biden unveiled Thursday.
The child tax credit was increased earlier this year for 2021 only. The plan allows qualifying families with children 6 to 17 to get a tax credit of $3,000 per child a year. Those with children under 6 can receive $3,600.
Since July, families have been able to get the credit as a monthly payment of up to $300 per child. It was unclear Thursday whether the monthly payments would be available in 2022.
Here’s the estimated average impact on California families that qualify, according to the Institute on Taxation and Economic Policy, a Washington research group:
▪ Less than $29,100 income (lowest 20%)...$4,080
▪ $29,100 to $51,700 (next 20%...$2,850
▪ $51,700 to $83,200 (next 20%)...$2,780
▪ $83,200 to $151,100 (next 20%)...$2,340
▪ $151,100 to $358,700 (next 15%)…$1,870
▪ $358,700 to $992,800 (next 4%)...$1,620
▪ $992,800 and above (top 1%)...0
The increase in the maximum amounts begins to phase out for parents with adjusted gross incomes of more than $75,000 for single filers, up to $112,500 for heads of households and up to $150,000 or less for married couples filing jointly
The credit has been “refundable,” meaning that if the credit is larger than the tax someone is supposed to pay, the government will make up the difference. If someone owes $600, for instance, and qualifies for $3,000 in child care credits, they’ll get $2,400 from the government.
The plan unveiled Thursday would make the refundability permanent.
If Congress fails to act, the credit would revert to its former level of a maximum of $2,000 per child under 17, and the benefit would be reduced even more, or ended entirely, for many low-income families.
The White House and Democratic leaders had wanted to continue the expanded child tax credit through 2025, but that plan was cut back as part of an effort to find common fiscal ground between the party’s centrists and liberals.
While many lawmakers wanted to see more details of the package, there was optimism that it would eventually be approved as Biden addressed House Democrats at the Capitol.
In the Senate, Sen. Kyrsten Sinema, D-Arizona, whose qualms about different parts of the package drove negotiations, said “I look forward to getting this done, expanding economic opportunities and helping everyday families get ahead.”
Francesca Chambers of McClatchy’s Washington Bureau contributed to this report.
This story was originally published October 28, 2021 at 5:01 PM.
.jpg)