ATLANTA – The annual federal child tax credit will shrink in half at the end of the year, falling to $1,000 if Congress does not intervene.
Most of the Democrats in the U.S. Senate, including Georgia’s Raphael Warnock, are calling not only to prevent that from happening but also to permanently expand the credit.
Legislation introduced Wednesday by Sen. Mchael Bennet, D-Colo., would increase the annual credit to $4,320 for parents with a child aged 5 and under and to $3,600 for each child aged 6 through 17. It would also offer a one-time $2,400 “baby bonus” to parents of newborns.
“This is about attacking poverty in our country and ensuring that the government isn’t taxing people into poverty,” said Warnock, who is among more than 40 other Senate Democrats co-sponsoring the bill.
Crucially, no members of the Senate’s Republican majority have signed onto the measure.
The tax credit was temporarily expanded in 2021 as part of the American Rescue Plan, which got no votes from Republicans in Congress.
But last year, J.D. Vance, then running for vice president, floated the idea of doubling the credit. And Republican state lawmakers in Georgia demonstrated that the GOP can get behind such policies when, in bipartisan votes, they passed House Bill 136 this year to establish a $250 per child state credit.
Child tax credits are growing in popularity as an effective way to support families, according to the Georgia Budget and Policy Institute, a left-leaning group.
After Congress temporarily expanded the credit in 2021, the child poverty rate for children under 6 fell nearly in half, from 9.8% to 5.3%, according to the U.S. Census Bureau. The poverty rate for older children fell to 5.2% from 8.9%.
When that temporary expansion expired, child poverty shot back up, with 5 million more children living in poverty in 2022, according to the Center on Budget and Policy Priorities, a liberal think tank.
Unlike the existing federal credit and the state credit in HB 136, the national Democrats’ proposal would establish a “refundable” credit, meaning low-income families who owe less in taxes than the value of the credit would actually get money from the federal government. Currently, they lose out on the difference between the credit and their tax bill, so higher earners are more able to take full advantage.