In March of 2021, Congress enacted a major relief measure that included not just stimulus cheques but also an expansion of the Child Tax Credit. Not only did the credit’s value rise, but half of it was distributed to users in monthly instalment instalments between July and December.
President Biden planned to maintain the increased Child Tax Credit in place until 2022, and he included legislation to that effect in his Build Back Better plan. However, that idea has yet to be approved by the Senate, and it currently seems that the increased Child Tax Credit will not be extended beyond 2022.
Unfortunately, despite a better economy than last year, this might put many Americans in a financial bind. Here are some figures that show why the expanded Child Tax Credit should be extended for at least another year.
1. The boosted credit reached more than 61 million children in December
That’s a significant amount. These payments were also made at a period when inflation was at its highest in over four decades. Many families are now trying to make ends meet due to rising living expenses. Many families may be forced into debt if they do not have monthly payments to assist balance them.
2. The boosted credit will have given the average household $4,380 for 2021
The average Child Tax Credit recipient will finish up with $4,380 owing to the improvement that was put in place for 2021, thanks to payments already received in 2021 and extra money claimed on 2021 tax returns, which the IRS just began accepting. That’s a significant increase above the $2,310 average household got under the prior credit.
3. The credit cut child poverty by about 30%
That’s a significant chunk of cash. And the difficulty is that if the enhanced benefit is withdrawn for 2022, most of the progress might be reversed, leading to worse child poverty rates this year.
4. The expansion made at least 23 million more children eligible
Prior to 2021, the Child Tax Credit had income restrictions, which meant that many families were unable to make use of it. Because those limitations were relaxed last year, an estimated 23 million additional youngsters were eligible to benefit from the credit.
5. Families earning less than $35,000 used their payments for basic needs
While some families may have used their increased Child Tax Credit payments to build savings or achieve other financial objectives, many families utilised the money to fulfil basic requirements such as rent, utility bills, food, and clothes. Because living expenses have grown so dramatically, many people may fall behind if the enhanced benefit is removed this year.
6. The boosted credit cut food insufficiency by 26%
Many homes struggle with food insecurity. Last year, the increased Child Tax Credit cut the prevalence of food insecurity by 26%. And, although a widespread return to in-person education may have alleviated the issue of food insecurity, it still doesn’t solve the problem altogether.
It’s obvious that the increased Child Tax Credit benefited millions of families. With any hope, politicians will continue to struggle to preserve the upgraded version in place this year, avoiding the many consequences that may result if families lose their financial safety net.
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