Monthly payments for the child tax credit will start processing on July 15.
About 39 million households will receive automatic payments.
“The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children,” President Joe Biden said. “With today’s announcement, about 90% of families with children will get this new tax relief automatically, starting in July.”
The plan is aimed at helping families budget their money and reduce child poverty. Payments will be made on a periodic basis from July to December.
The American Resue Plan also increased the maximum credit amount from $2,000 to $3,600 for families with children under the age of six and $3,000 for older children. Eligible families will receive monthly payments on the 15th of up to $300 for children six years old and younger and up to $250 for children over the age of six.
The credit is fully refundable.
Families will receive up to half the amount of the credit this year and the other half when they file their 2021 tax returns next year.
Senate Finance Committee Chairman Ron Wyden says that outreach efforts and ducation is needed to ensure that families receive their payments.
“To ensure this policy achieves its goals, outreach and education campaigns in the coming months are critical,” he said. “Children living in poverty are far more likely to live in families that do not file taxes, so there’s work to do to make sure families don’t fall through the cracks.
“While the American Rescue Plan provides for this vital tax relief to hard working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come,” President Biden said. “For working families with children, this tax cut sends a clear message: help is here.”
Congressional Democrats are pushing to make the full expansion of the credit permanent.
“The Biden Administration worked tirelessly to get this program up and running in a matter of a few short months, and I am so grateful for their partnership in working to cut child poverty in half,” House Ways and Means Committee Chairman Richard Neal said. “But now that nearly 90 percent of our nation’s children will benefit from this critical lifeline, we must make this change permanent.”