Americans want to know what newly-inaugurated President Donald Trump plans to do with the Child Tax Credit as he starts his second term. His administration has the option to extend the current CTC, decrease it, increase it, or cancel it, and the ramifications for millions of parents and guardians are significant. Hundreds of thousands of financially vulnerable households in the United States depend on the CTC as an essential economic boost, and doing away with the credit will affect their children’s standard of living.
Does Donald Trump have a plan for the Child Tax Credit?
It’s not at all clear what President Trump’s plan is for the Child Tax Credit or whether he has a plan at all. There are a number of speculations, but neither Trump nor anyone from his Republican administration has made any official statements about the future of the credit.
One speculation is that the CTC will be allowed to continue as it is currently, which will be a relief to the many families who count on these funds to offset the cost of raising children. There’s a chance that the credit could be increased, but experts feel this is a less likely option with President Donald Trump holding the country’s reins.
What is the current status of the CTC?
The Child Tax Credit was established almost three decades ago in 1997. It allows parents to reduce their tax liability by a certain amount for each child up to the age of 17. The current CTC amount is $2,000, and if tax filers owe more than this, $2,000 will be deducted from their due amount.
However, only $1,600 of the credit is refundable. This means that parents or guardians who don’t owe any taxes will only be paid out $1,600 of the $2,000, and the non-refundable $400 will revert back into the tax system. Similarly, if there are taxes due but they are less than $1,600, whatever is left after that will be paid out as a refund.
What did Joe Biden do with the CTC during his term?
Former president Joe Biden was a fan of the CTC and its benefits for U.S. citizens. In 2021, when Americans were suffering under the economic effects of the COVID-19 pandemic and lockdowns, Biden temporarily increased the CTC to $3,600 for each child aged from birth to six years and $3,000 per child aged seven years and older up to the age of 17.
Not only was the tax credit increased, but Biden made the full amount refundable. Statistics show that around 60 million children across the United States benefited from the decision, and child poverty sharply decreased by around 30%.
In more news about politicians making a stand on behalf of their constituents’ pockets, families in the State of New York may be boosted with an increased Child Tax Credit if Governor Kathy Hochul has her way.
Can any deductions be made about the future of the Child Tax Credit?
Donald Trump has said little about the CTC specifically, but he has touched on reducing taxes in general. Some Republicans have spoken about the possibility of expanding the credit, such as Vice President JD Vance, who suggested raising the amount to $5,000 per child. Senator Josh Hawley offered a similar proposal of $5,000, but this would only be paid out to households when the minors have a proven good school attendance record.
It’s up to Congress to decide what will become of the Child Tax Credit, and as it stands, the outcome is up in the air. There’s no doubt that the millions of American citizens on the lower end of the income scale will be holding out in hopes of at least an extension of the current credit, if not an increase.
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