In the News

Currently, parents can subtract up to $2,000 per child from their income taxes, following an expansion in the 2017 tax law. Parents of children under age 17 are eligible for the credit, which starts phasing out once income reaches $200,000 for individuals and $400,000 for married couples.

The credit isn’t a deduction, because it reduces the tax you owe dollar-for-dollar as opposed to reducing taxable income. So as a share of income, the credit becomes less valuable as income rises.

Some low-income families face limits on the credit, and that means 27 million children don’t get the full benefit, according to the left-leaning Center on Budget and Policy Priorities. The credit increases along with wages for low-income households, and only $1,400 is fully refundable, or payable even if someone doesn’t owe income taxes.

What is Mr. Biden proposing?

On the campaign trail, Mr. Biden proposed a one-year version of the child tax credit expansion long advocated by Democrats such as Rep. Rosa DeLauro (D., Conn.), Rep. Suzan DelBene (D., Wash.), Sen. Michael Bennet (D., Colo.) and Sen. Sherrod Brown (D., Ohio).

Their plan would raise the $2,000 credit to $3,000, set the credit at $3,600 for parents of children under age 6 and make parents of 17-year-olds eligible. It would also make the credit fully refundable, so low-income households would get the full benefit, no matter how little they earn. For a household with a 4-year-old and 7-year-old that doesn’t earn enough to pay income taxes, the plan would boost their maximum child tax credit to $6,600 from $2,800.

The proposal would also authorize monthly payments, so that the credit becomes a near-universal child allowance like those in some other countries instead of part of a lump-sum tax refund.

“Nobody pays their bills just once a year,” Ms. DeLauro said Monday as she released the latest version. “You pay your bills every month.”

Click here to read the full article on the WSJ.