A new proposal to enhance the Child Tax Credit: how it will affect Fremont families
On Tuesday, Jan. 16, lawmakers announced a $78 billion bipartisan tax agreement. Democratic Sen. Ron Wyden and Republican Rep. Jason Smith proposed a new system to enhance and boost credit policies, inflation, refundable credit and available access to tax packages.
The new agreement would change the maximum refund tax credit to $1,900 in 2024 and $2,000 in 2025. It will also expand credit eligibility for larger families if their income suddenly drops.
While Congress has not accepted the proposal, Wyden hopes to get this agreement passed by tax season (Jan. 29).
What is included in this proposal?
According to the nonpartisan Center on Budget and Policy Priorities (CBPP), the changes would allow a single parent with two children who earns $13,000 to see their tax credit double within their first year. A married couple earning $32,200 will see a $975 gain.
The Child Tax Return has helped families with qualifying children and incomes receive a tax break. This proposal helps widen financial availability and provide a stable structure for American families to live on.
The Child Poverty Rate doubled in less than a year, going from 5.2% in 2021 and 12.4% in 2022. If passed and enacted, this agreement can aid and provide support to more than 15 million low-income families.
The CBPP says this will mainly help black, Latino and indigenous children in lower-income areas around America.
How does this relate to the local community of Fremont?
Fremont Public Schools contains 14 schools and more than 5,000 students. The district’s minority enrollment is 40%. 42.6% of students are economically disadvantaged, which means more than 2,000 students will receive economic benefits from the new Child Tax Credit proposal.
Fremont High School has about a 50% minority rate. The new additions to the Child Tax Credit return can help more than 800 students.
Due to high inflation rates, around 50% of Fremont families are living paycheck to paycheck meaning they are only one paycheck away from becoming homeless.
If the new proposal is approved and receives additional backing from the Federal Government, it has the potential to provide a significant economic boost to many Fremont families and other communities in need, allowing them to break free from the cycle of poverty and start anew.
Updates as of Feb. 20:
The “Tax Relief for American Families and Workers Act of 2024” (H.R. 7024) was passed by the U.S. House of Representatives on January 31, 2022, with a vote of 357 to 70. The bill includes provisions to expand the Child Tax Credit, which is a victory for low-income families.
The expanded Child Tax Credit will benefit families with incomes below $50,000, who report spending nearly a third of their CTC payments on rent. However, the bill does not include key reforms to the Low-Income Housing Tax Credit (LIHTC), which is the nation’s primary source of financing for the construction and preservation of affordable housing.
Although the bill includes provisions to expand LIHTC, many LIHTC-supported homes will remain unaffordable for the people who need them most without these key reforms. The National Low Income Housing Coalition (NLIHC) will continue to monitor the legislation as it moves to the U.S. Senate and will urge advocates to call on their Senators to adopt key reforms in any future expansion of LIHTC.
