Institute on Taxation and Economic Policy

Refundable Tax Credits

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ITEP Data on Child Tax Credit and Earned Income Tax Credit Provisions Before Congress

December 14, 2021 • By Steve Wamhoff

Congress expanded the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) for 2021 as part of the American Rescue Plan Act (ARP). The additional benefits that millions of families and workers received under that law will end this month if Congress does not act soon. The CTC expansion boosted the annual tax credit […]

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Tax Credits in Build Back Better Support Millions of Families

December 9, 2021 • By ITEP Staff

The EITC and CTC are proven poverty-fighting tools. The monthly CTC payments alone kept 3.6 million people out of poverty in October. This policy success is worth repeating.

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Tax Credit Reforms in Build Back Better Would Benefit a Diverse Group of Families

November 18, 2021 • By Aidan Davis

The CTC and EITC provisions would have a particularly profound effect on the poorest 20 percent of Americans, who all will have incomes of less than $22,000 in 2022. Taken together, the EITC and CTC changes would lift the average income of these households by more than 10 percent.

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New Census Data Highlight Need for Permanent Child Tax Credit Expansion

September 14, 2021 • By Neva Butkus

The status quo was a choice, but the Census data released today shows that different policy choices can create drastically different outcomes for children and families. It is time for our state and federal legislators to put people first when it comes to recovery.

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A Data-Driven Case for the CTC Expansion in the Ways & Means Committee’s Recent Proposal

September 13, 2021 • By Aidan Davis

The move toward permanent full refundability and inclusion of all immigrant children are crucial components of the future of the CTC. Together they will help ensure that the credit reaches the children most in need, making a vital dent in our nation’s unacceptably high rate of child poverty.

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Child Tax Credit Expansion Acknowledges There Is More We Can Do for Children

July 20, 2021 • By Aidan Davis

For the next six months, low-, middle- and upper-middle-income families with children are eligible to receive part of their 2021 Child Tax Credit (CTC) in advanced monthly payments. More than putting money in people’s pockets, this policy recognizes “the dignity of working-class families and middle-class families,” as President Biden said last week.

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Child Tax Credit Is a Critical Component of Biden Administration’s Recovery Package

June 11, 2021 • By Aidan Davis

Nearly one in seven children in the United States live in poverty and about 6 percent of all children live in deep poverty. President Joe Biden’s American Families Plan would tackle child poverty in an immediate, meaningful way. It is expected to extend the one-year Child Tax Credit (CTC) enhancements included in the March 2021 American Rescue Plan (ARP) through 2025. Next year alone, this would provide around a $110 billion collective income boost to roughly 88 percent of children in the United States.

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Nearly 20 Million Will Benefit if Congress Makes the EITC Enhancement Permanent

May 13, 2021 • By Aidan Davis

Overall, the EITC enhancement would provide a $12.4 billion boost in 2022 if made permanent, benefiting 19.5 million workers. It would have a particularly meaningful impact on the bottom 20 percent of eligible households who would receive more than three-fourths of the total benefit. Forty-one percent of households in the bottom 20 percent of earners would benefit, receiving an average income boost of 6.3 percent, or $740 dollars.

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Inclusive Child Tax Credit Reform Would Restore Benefit to 1 Million Young ‘Dreamers’

April 27, 2021 • By Marco Guzman

As the Biden administration maps out the next steps in America’s response to the coronavirus pandemic—through what is now being called the American Families Plan—it should make sure a proposed expansion of the Child Tax Credit (CTC) includes undocumented children who have largely been left out of federal relief packages this past year. Prior to 2017 Tax Cut and Jobs Act, all children regardless of their immigration status received the credit as long as their parents met the income eligibility requirements. This change essentially excluded around 1 million children and their families.

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Details of House Democrats’ Cash Payments and Tax Credit Expansions

February 9, 2021 • By Steve Wamhoff

The House Ways and Means Committee published its proposal for the cash payments, tax provisions and other changes that would make up part of the $1.9 trillion COVID relief legislation that President Joe Biden called for a few weeks ago.

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Child Tax Credit Enhancements Under the American Rescue Plan

January 26, 2021 • By Aidan Davis, Jessica Schieder

President Joe Biden’s coronavirus relief package, the American Rescue Plan, includes a significant expansion of the Child Tax Credit (CTC). The president’s proposal provides a $125 billion boost in funding for the program, which would essentially double the size of the existing federal credit for households with children. Combined with existing law, the CTC provisions in Biden's plan would provide a 37.4 percent income boost to the poorest 20 percent of families with children who make $21,300 or less a year.

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Adding Flexibility to Make the EITC Work During the Pandemic

April 1, 2020 • By Aidan Davis

Temporarily modifying the structure of the EITC to reflect the realities of our current economy could provide a vital lifeline to low-income workers who have seen their incomes disappear during this crisis. What follows are a few such ideas which could be implemented at either the federal or state levels, or both.

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NEW ANALYSIS: House Democratic Stimulus Bill Explained

March 24, 2020 • By ITEP Staff, Meg Wiehe, Steve Wamhoff

Breaking ITEP analysis explains how a newly-introduced House Democrats' proposal—far more comprehensive and better targeted than the recently failed GOP Senate bill—combines overdue expansion of the Earned Income Tax Credit and Child Tax Credit with direct rebates to reach workers and families across all income groups.

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Mayor Pete Buttigieg’s Proposed EITC Expansion

December 19, 2019 • By ITEP Staff

Mayor Pete Buttigieg's proposal An Economic Agenda for American Families: Empowering Working and Middle Class Americans to Thrive would expand the Earned Income Tax Credit (EITC) as modeled by the Working Families Tax Relief Act.

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Julián Castro Provides the Latest Proposal to Expand Refundable Tax Credits

September 17, 2019 • By Steve Wamhoff

New estimates from ITEP show that Julián Castro’s refundable tax credit proposal would mostly benefit the bottom 60 percent of households and would have a cost ($195 billion in 2020) that places it roughly in the middle of the different tax credit proposals that Democrats have offered over the past several months.

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Census Numbers Show the Power of the Tax Code to Direct Resources to Low-Income Families

September 10, 2019 • By Jessica Schieder

Refundable federal tax credits, including the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), lifted 7.9 million people out of poverty in 2018. This latest analysis from the U.S. Census Bureau demonstrates the power of federal programs to alleviate poverty and help low-income families keep up with the increasing cost of living.

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Major Federal Tax Credit Proposals

September 10, 2019 • By ITEP Staff

In 2019, several federal lawmakers have introduced tax credit proposals to significantly expand existing tax credits or create new ones to benefit low- and moderate-income people. While these proposals vary a great deal and take different approaches, all build off the success of the EITC and CTC and target their benefits to families in the bottom 60 percent of the income distribution who have an annual household income of $70,000 or less.

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Rep. Tlaib’s Tax Credit Proposal Is Most Expansive to Date

June 26, 2019 • By Steve Wamhoff

A refundable tax credit proposed by Rep. Rashida Tlaib (D-MI) would be more expansive than other recent tax credit proposals, new estimates from ITEP show. Rep. Tlaib’s proposal, unlike others, does not require households to work to receive the benefit.

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BOOST Act

June 25, 2019 • By ITEP Staff

The BOOST Act would provide a new tax credit of up to $3,000 for single people and up to $6,000 for married couples, which would be in addition to existing tax credits. Income limits would prevent well-off households from receiving the credit. Unlike other refundable tax credit proposals, the BOOST Act would not be limited to people with earnings or people with children.

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Unlike Trump-GOP Tax Law, There Are Tax Plans That Would Actually Deliver on Promise to Help Working People

May 24, 2019 • By Alan Essig

Using the tax code to boost the economic security of low- and moderate-income families is a proven strategy. These bold proposals would go much further than any policy currently on the books, and their approach directly contrasts with longstanding supply-side theories that call for continual tax cuts to those who are already economically faring far better than everyone else.

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Proposals for Refundable Tax Credits Are Light Years from Tax Policies Enacted in Recent Years

May 22, 2019 • By Steve Wamhoff

A new ITEP report examines five big proposals that have been announced this year to create or expand tax credits to address inequality and help low- and middle-income households.

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Cost-of-Living Refund Act

May 22, 2019 • By ITEP Staff

The Cost-of-Living Refund Act would expand the Earned Income Tax Credit (EITC) for low- and moderate-income working people. The maximum EITC would nearly double for working families with children. Working people without children would receive an EITC that is nearly six times the size of the small EITC that they are allowed under current law.

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American Family Act

May 22, 2019 • By Jessica Schieder, Meg Wiehe, Steve Wamhoff

The American Family Act would expand the Child Tax Credit (CTC) for low- and middle-income families. The CTC would increase from $2,000 under current law to $3,000 for each child age six and older and to $3,600 for each child younger than age six. The proposal removes limits on the refundable part of the credit so that low- and moderate-income families with children could receive the entire credit.

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Working Families Tax Relief Act

May 22, 2019 • By Jessica Schieder, Meg Wiehe, Steve Wamhoff

The Working Families Tax Relief Act would expand the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) for low- and middle-income families.

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LIFT the Middle Class Act

May 22, 2019 • By Jessica Schieder, Meg Wiehe, Steve Wamhoff

The LIFT (Livable Incomes for Families Today) the Middle Class Act would create a new tax credit of up to $3,000 for single people and up to $6,000 for married couples, which would be an addition to existing tax credits. Eligible taxpayers would be allowed a credit equal to the maximum amount or their earnings, whichever is less. Income limits would prevent well-off households from receiving the credit.

Refundable credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) boost the economic security of working families. ITEP examines how such tax credits affect working people’s incomes and how this would change under proposals to modify the credits or create new ones.