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Financial Planning > Tax Planning > IRS Updates

Economic Relief Bill to Include New, Larger Child Tax Credit

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House Democrats are starting to release their proposed plans for the upcoming $1.9 trillion economic relief package that President Joe Biden is likely to pursue via the budget reconciliation route that requires only a majority vote.

Among the provisions, first reported by The Washington Post, is a proposal by the House Ways & Means Committee to include a child credit of $3,600 a year for children 5 and younger and $3,000 for children 6 to 17 who live with single parents earning up to $75,000 and couples earnings up to $150,000. 

The credits exceed the current $2,000 child credit for all children under 17 that is available to single parents earning $200,000 or less and couples earning up to $400,000. The existing and proposed child credits phase out for families with incomes over their respective income thresholds. 

Sen. Mitt Romney, R-Utah, recently introduced his Family Security Act, which would provide an even larger credit for families: $4,200 annually ($350 per month) for children 5 and under and $3,000 per year ($250 per month) for children 6 to 17, which suggests possible bipartisan support for this provision of the Biden relief package when it is introduced.

House Committees’ Plans

The House Ways & Means Committee late Monday unveiled its plans for the tax and spending provisions included in its proposal. In addition to a larger child tax credit the proposal includes direct payments to families, extended unemployment and stabilization of pensions for the more than one million Americans who participate in multi-employer retirement plans.

Relief checks of $1,400 per adult would be sent to individuals earning up to $75,000 per year and couples earning $150,000, which maintains the income thresholds of previous relief checks. Some Democrats including President Biden had expressed an openness to lowering those income thresholds.

Ways & Means is one of a dozen House committees that is developing proposals for the relief package.

The House Committee on Education and Labor and the House Finance Committee disclosed their plans on Monday. Among the provisions from the Education and Labor Committee are aid for K-12 schools and colleges, workplace protections for essential workers and a gradual increase in the minimum wage to $15 an hour by 2025. The Finance Committee’s provisions include billions for spending under the Defense Production Act related to address the COVID-19 pandemic, along with assistance for homeowners, homeless people and airline workers.

On Friday the House passed a budget resolution that had already been passed by the Senate, paving the way for Biden to pursue his $1.9 trillion economic relief package without Republican support. The memorandum from House Financial Services Chairwoman Maxine Waters, D-Calif., lays out the budgetary target for each of the 12 House committees working on the relief package and sets a deadline no later than Feb. 16 for each committee to approve legislation that will be included in the bill.


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