Presented by: EWM Tax Solutions
Read Time: 3 MIN
A new bipartisan bill, valued at $78 billion, has been proposed by federal lawmakers to enhance the child tax credit, potentially lifting nearly half a million children out of poverty in its first year. This initiative aims to provide increased benefits to parents, as stated by Democratic Senator Ron Wyden of Oregon and Republican House member Jason Smith of Missouri.
For the 2023 tax year, parents can currently claim a child tax credit of up to $2,000 per child when filing their tax returns, as per the Internal Revenue Service guidelines. This full amount is available to married couples filing jointly with an income below $400,000 and to other filers with incomes under $200,000.
If a family’s modified adjusted gross income exceeds these limits, the credit is reduced by $50 for every additional $1,000 earned. To be eligible, each child must be under 17 years old, and families must earn a minimum of $2,500 annually or have at least three qualifying dependents.
The existing child tax credit has a refundable portion capped at $1,600. A refundable tax credit allows taxpayers to receive the amount even if it surpasses the tax they owe. The new legislation aims to increase this refundable amount to $1,800 for the 2023 tax year, followed by $1,900 in 2024 and reaching $2,000 in 2025.
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