Child Tax Credit Payments Could Come Back Bigger & Better Than Ever

Remember the Child Tax Credit Payments back in 2021? Back then, families got payments of up to $3,600 (divided into 12 monthly payments of $300) as part of the American Rescue Plan — impacting more than 61 million kids. A new congressional bill in the works could bring those Child Tax Credit payments back — this time with more cash per kid.

And, perhaps biggest of all, if the bill becomes law, these payments would become permanent. So how much could you get? Who’d be eligible? We’ve got the details on this bill that already has more than 200 Congressional sponsors.

It’s some good financial news after student loan forgiveness got shut down by the U.S. Supreme Court.

Here’s what you need to know, based on a fact sheet from the office of Connecticut Rep. Rosa DeLauro:

 

More kids will be eligible for the Child Tax Credit under the American Family Act.

The American Family Act aims to include more children by adjusting two previous limitations. Here’s how:

• Removing the $1,400 Limit: Before, the Child Tax Credit (CTC) was partially “refundable.” This means that even if a family owed less in taxes than their credit, they could only get up to $1,400 back in cash. Now, the American Family Act wants to make the CTC “fully refundable.” This means a family could receive the full credit amount in cash, even if they owe less in taxes.
• Eliminating the Earnings Requirement: The old CTC had an “earnings requirement” which meant a family had to earn a certain amount of money to qualify for the full credit. The American Family Act removes this rule, allowing low-income families and those with no income to receive the full credit.
• Expanding the CTC to U.S. Territories: Kids in Puerto Rico, Guam, American Samoa, the Northern Mariana Islands, and the U.S. Virgin Islands would be eligible for the first time.

 

Your Child Tax Credit would go up — and would include a $2,000 ‘baby bonus’.

The old Child Tax Credit paid $2,000 per kid under 18. The American Family Act would make the 2021 Child Tax Credits permanent: $3,600 per year for children under six years old, divided into 12 monthly payments of $300, and $3,000 per year for children ages 6 to 17 — or $250 per month.

In addition, the new proposal would offer an extra $2,000 in the month a new baby is born, a significant financial help to families with a new member.

 

 

The monthly payments would replace a ‘tax coupon’ you get when you file.

What is a Child Tax Credit, anyway? A Child Tax Credit is basically a tax coupon for kids who live with you. Most of the time, you never actually get it paid to you; it takes away from the amount of taxes you’d have to pay each year.

But in the 2021 tax year, the government made some of the Child Tax Credit available to families in the form of monthly payouts. If you’re a parent, you likely received up to $3,600 in 2021 from Child Tax Credit payments.

So — instead of the tax coupon, you got cash. Which kids notoriously seem to absorb.

TIP: For money relief and advice on how to make life while parenting easier, you’ll want to bookmark our Family Tips page.

 

The American Family Act has more than 200 sponsors — but we’ll have to wait and see what happens in Congress.

The American Family Act has just been reintroduced, which is the first step in the legislative process. It will need to be reviewed and voted on by various committees before it reaches the floor of the House of Representatives for a vote. Then it has to clear the Senate and be signed by the President.

It’s worth noting that this bill has significant support already, with over 200 Members of Congress co-sponsoring it and many organizations endorsing it. But there will likely be debates and potential changes to the bill before it would become law.

So, we watch and wait to see how it progresses through the legislative process.

 

There’s another Child Tax Credit increase bill that seems to have stalled out.

Back in June 2022, Sen. Mitt Romney introduced the Family Security Act 2.0, which also aims to enhance the CTC and provide monthly payments — potentially offering up to $4,200 per child under age six and $3,000 per child aged 6-17. Families could opt for a lump sum or monthly payments of up to $350 for a child under six and $250 for a child between 6-17, paid over a year.

The legislation even considers expectant parents, who could start receiving $700 monthly payments four months before their child is born. The full benefit applies to households earning between $10,000 and $200,000. Those earning less than $10,000 would receive a percentage of the CTC, while higher earners would see a reduction in their benefit.

 

 

Meanwhile, your state may be offering Child Tax Credit payments.

While we wait to see what lawmakers will do, make sure you don’t miss out on the Child Tax Credits in 12 states; most of these are traditional tax credits, not stimulus payments.

 

California

You can get up to $1,000 from the Young Child Tax Credit if you live in California.

Requirements:

• California resident
• Eligible for the Earned Income Tax Credit
• Have a child under six
• There is no earnings minimum or maximum

Note: This is a permanent credit, meaning there’s no end date — you’ll get this credit every year. The credit amount is adjusted yearly to keep up with inflation.

 

Colorado

You can get a refundable credit of $600 in Colorado.

Requirements:

• California resident
• Have a child under six
• You must make no more than $75,000 ($85,000 for married taxpayers filing jointly)

Note: The credit will be available every year.

 

Connecticut

The Connecticut Child Tax Rebate offers rebates up to $250 per child (covering up to three kids, $750 maximum rebates).

Requirements:

• Connecticut resident
• Have a child under 19
• Have claimed at least one child as a dependent on your tax return
• You must make $100,000 or less ($200,000 or less if married and filing jointly)

 

Idaho

In 2018 Idaho added nonrefundable dependent credits worth $205 to their tax codes (through January 2026).

Requirements:

• Idaho resident
• Have a child under 17

 

Maine

In 2018, Maine also added nonrefundable dependent credits worth $300 per child to their tax codes.

Requirements:

• Maine resident
• Have a child under 17

 

Massachusetts

In Massachusetts, you can get the household dependent tax credit for $180 per dependent and $360 for two or more.

Requirements:

• Massachusetts resident
• Have dependents who must be under the age of 12 or over 65
• Taxpayers can choose between this credit or the dependent care tax credit

Note: You can get these credits and the standard dependent deduction (the amount that you can deduct from taxes). This is credit is available every year.

New Jersey

New Jersey has a Child Tax Credit that grants up to $500 per child.

Requirements:

• New Jersey resident
• Have a child under six
• Income under $30,000 gets $500, under $40,000 gets $400, under $50,000 gets $300, under $60,000 gets $200

Note: This credit will be available every year.

 

New Mexico

New Mexico offers a maximum tax credit of up to $175 for each child (through the end of 2026).

Requirements:

• New Mexico resident
• Have a child under 17

 

New York

New York has a refundable credit worth $330 per child or 33% percent of the federal credit you got in 2021— whichever amounts to more.

Requirements:

• New York resident
• Qualified for federal Child Tax Credit
• Have a child under 17 or over four

Note: This credit will be available every year.

Oklahoma

If you live in Oklahoma, you can get 5% of the federal Child Tax Credit. So if you got the $3,600 Child Tax Credit, you’d get $180.

Requirements:

• Oklahoma resident
• Have a child under 17
• You must make under $100,000

Note: This credit will be available every year.

 

Rhode Island

Rhode Island issued one-time tax rebates of up to $250 per child (maximum $750, up to three kids).

Requirements:

• Rhode Island resident
• Have a child under 19
• You must make $100,000 or less ($200,000 or less if married and filing jointly)

 

Vermont

Vermont’s child tax credit caps at $1,000 per child

• Vermont resident
• Have a child under five
• You must make under $125,000

Note: This credit will be available every year.