American Rescue Plan and the Child Credit Tax

WASHINGTON, D.C. — President Biden signed the American Rescue Plan into law today, and one part of that bill could result in money in the pockets of parents.

Currently, the child tax credit system allocates $2,000 per child under 17 to parents who can show a minimum of $25,000 in earnings on their taxes. With the American Rescue Plan, things are different.

Parents now no longer need to have a minimum income to collect their child tax credit, and can claim a tax credit of up to $3,000 on their children through the age of 17. Parents can claim $3,600 on children under the age of 6.

Those who collected a child tax credit last year may have noticed it was only partially refundable- up to $1400. After Biden signed his relief bill into law, this tax season offers a fully refundable child tax credit. The bill is projected to lift four million children out of poverty.

Single parents who report an income over $75,000 and married couples who report over $150,000 would not be eligible for a child tax credit. Heads of households reporting over $125,000 in income would not collect, either.