Congress may revisit the expanded child tax credit in the lame duck session. But terms may not be as generous as in 2021

Personal finance

House and Senate champions and impacted families appear at a Dec. 7 Washington, D.C., event for expanding the child tax credit during the lame duck session.
Tasos Katopodis | Getty Images Entertainment | Getty Images

Millions of children were lifted out of poverty in 2021, thanks to a more generous child tax credit that included monthly checks sent out to more families.

Now, the lame duck session of Congress offers a last chance this year to renew the expanded child tax credit that lapsed in December 2021.

As the end of year approaches, many Democrats on Capitol Hill have raised their voices in support of reinstating the more generous child tax credit.

“This is a moment where we must make a lasting commitment, not just in Congress, but as a nation, to saying that not one child growing up in the richest country on the planet should be growing up in poverty,” Sen. Cory Booker, D-N.J., said at a Capitol Hill event urging urgent action on the child tax credit.

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The child tax credit was a key policy that helped usher a record-breaking decline in poverty in 2021, a new report from the U.S. Joint Economic Committee Democrats found.

The number of children living in poverty fell to historic lows as the full child tax credit was made available to an additional 19 million low-income children.

This was largely driven by the enhanced credit’s full refundability, which made all families eligible for the full credit, with the exception of the highest-income families, according to the Joint Economic Committee.  

The child tax credit was increased in 2021 from $2,000 per child to up to $3,600 per child under 6 and up to $3,000 for children ages 6 through 17. Half of those sums were made available through monthly payments of up to $300 per child under 6 and $250 per child ages 6 through 17. Eligible parents received the rest of the credit when they filed their tax returns.

‘No corporate tax cuts without tax cuts for working families’

Senator Sherrod Brown, D-Ohio, Senator Cory Booker, D-N.J., and Rep. Suzan DelBene, D-Wash., with supporters during press briefing on expanding the child tax credit during the lame duck session on Dec. 7 in Washington, D.C.
Tasos Katopodis | Getty Images Entertainment | Getty Images

For 2022, the child tax credit has reverted back to $2,000 per child under 17. Now, Democrats are hoping to pass an enhanced version with a corporate tax extenders Congress is poised to consider.

Certain Democratic leaders such as Sen. Sherrod Brown, D-Ohio, have vowed to oppose any corporate tax breaks unless the child tax credit is also expanded.

“These tax cuts have made such a difference in families’ lives,” Brown said this week. “They must continue.

“It’s pretty simple — no corporate tax cuts without tax cuts for working families.”

However, any deal for a newly expanded child tax credit may not provide for terms as generous as they were under the terms of the American Rescue Plan Act in 2021, according to Rachel Snyderman, senior associate director at the Bipartisan Policy Center.

While both parties are interested in revisiting the child tax credit, there could be compromise around the income phase-ins and maintaining an incentive for labor force participation, she said. Lawmakers may also look to index the credit to inflation in the short term.

With only so many legislative days on the calendar left, it remains to be seen whether Congress will find time to address the issue before the end of the month. But there is “certainly” room to address it next year, Snyderman said.

“The child tax credit is going to remain high on the priority list for the next Congress,” Snyderman said.

“Even if a short-term deal isn’t made this year, I’m confident that it will remain top of the priority list early next year and throughout the next Congress,” she said.

One key reason for that is terms of the credit currently in effect, with $2,000 per child, was implemented with the Tax Cuts and Jobs Act and set to expire in 2025.

Still, advocates are pushing for Congress not to wait and to act on the child tax credit before year end.

On Tuesday, national parent advocacy organization MomsRising plans to meet Congressional members at the doors of Capitol Hill with small duck toys and people in duck costumes to urge leaders to “make it a super duck session” and not “duck their responsibilities” to families, according to CEO Kristin Rowe-Finkbeiner.

They also have digital ads targeted at Congress stating, “More tax cuts for corporations? Moms are watching.”

“We’re really keeping the pressure on,” Rowe-Finkbeiner said. “Right now, parents across America are in a continued state of emergency with a pandemic that’s turned endemic and rising costs.”

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