Stimulus Update: New Child Tax Credit Proposal Could Include $2,000 ‘Baby Bonus’ — Who Would Qualify?
A trio of U.S. House Democrats have introduced legislation that would reinstate the expanded child tax credit and provide a $2,000 “baby bonus” for families with newborns.
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U.S. Reps. Rosa DeLauro of Connecticut, Suzan DelBene of Washington and Ritchie Torres of New York included the bonus as part of a larger bill to reintroduce the 2021 American Rescue Plan Act. The act gave eligible households an extra $250 per month for each qualifying child ages 6 to 17 and $300 per month for each qualifying child under age 6.
That program ended in 2021, and efforts to revive it have fallen short. The new bill sponsored by DeLauro, DelBene and Torres — and co-sponsored by more than 200 others — would make the expanded CTC permanent.
“When we expanded and improved the Child Tax Credit in 2021 under the American Rescue Plan, it provided unprecedented economic security for American families. It was the largest tax cut for middle-class and working families in generations,” DeLauro stated in a June 7 press release. “These monthly payments helped parents pay bills, keep healthy and nutritious food on the table, afford school clothes and supplies, pay for a music lesson or a new pair of cleats, or manage a mortgage or rent payment. It lifted nearly 4 million children out of poverty in one year alone.”
In addition to making the expanded CTC permanent, the new legislation would also increase the size of the credit in the month a baby is born to $2,000, Roll Call reported. For a child born in January, the household could receive a total amount worth up to $5,300 for the year, though it would decrease to the typical $3,600 the following year. Parents of children born all the way through June would still receive a larger credit than the original 2021 amount in the first year, according to Roll Call.
Any newborn bonus advantage “shrinks over time,” Roll Call added. The total lifetime per-child benefit is “ultimately the same” because monthly credits disappear once the child turns 18.
The baby bonus feature has not been included in prior versions of the bill, nor is it part of a Senate companion bill that also includes an expansion of the child tax credit. As previously reported by GOBankingRates, the Senate bill — led by six Democrats — would increase the CTC so that monthly payments would be as high as $3,600 for eligible households.
Sponsors of the Senate bill aim to lead 41 Senate Democrats in reintroducing the Working Families Tax Relief Act, which would cut taxes for workers and families by expanding the CTC and Earned Income Tax Credit.
Although Republicans and Democrats tend to be far apart when it comes to government programs that might result in higher taxes, there could be room for compromise this time around. That’s because congressional Republicans want to push through a tax reform bill, and see the expanded CTC as a bargaining chip in negotiations.
It’s unclear whether they would agree to the baby bonus legislation, however. As Roll Call reported, the bonus didn’t come up during debate in the Ways and Means Committee recently, when DelBene sought to offer it as an amendment to the GOP tax bill. DelBene’s amendment was ruled “nongermane,” and Republicans rejected an attempt to overturn the ruling.
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This article originally appeared on GOBankingRates.com: Stimulus Update: New Child Tax Credit Proposal Could Include $2,000 ‘Baby Bonus’ — Who Would Qualify?
