On Thursday, the House of Representatives passed a $1.9 trillion stimulus package to help the millions of Americans who continue to struggle as a result of the COVID-19 pandemic. The stimulus package contains many forms of relief, from direct payments of $1,400 for individuals earning less than $80,000 a year to a $300 weekly boost in unemployment benefits, but one of its most exciting features is the increased child tax credit that will put more money directly into the pockets of qualifying parents. Below, find answers to all your questions about the child tax credit:
How does the child tax credit work to help families?
There’s already an existing child tax credit in the U.S., but this bill will raise the maximum benefit that most families receive by up to 80% per child, and make said benefit applicable to many families whose earnings had previously been too low to qualify them. Parents would receive a monthly check of up to $300 per child, which—for a one-child household in which two parents each hold minimum-wage jobs—would represent a 20% increase in annual income. Considering that the average cost of childcare in the U.S. is $1,230 per month, it’s easy to see how directly a monthly cash infusion of that quantity would benefit working parents.
Who will the child tax credit help?
93% of children in the U.S. will receive benefits as a result of the bill. David Wessel, director of The Hutchins Center on Fiscal and Monetary Policy at The Brookings Institution, called the bill “one of the most significant steps we’ve taken to lift children out of poverty.”
What’s the history of the child tax credit in the U.S.?
The child tax credit was initially created by the Taxpayer Relief Act of 1997, and is currently worth up to $2,000 per child under 17 at the end of the tax year. This per-child total falls by a certain amount as a family’s income rises, in an attempt to ease the financial burden on America’s lowest-income families.
Which other countries have child tax credits, or similar initiatives?
Countries including Austria, Finland, Germany, the U.K., and Denmark all provide some form of universal child benefits; in Germany, for example, this initiative is known as “kindergeld,” and can run up to $281 per month in U.S. dollars.