Tax Credit Update: Biden Wants to Make New Savings Permanent

President Joe Biden said on Tuesday he wants to reintroduce and permanently sustain the policy of child tax credits while suggesting that Americans having access to more affordable child care would help expand the economy.

Biden’s American Rescue Plan legislation that secured approval in 2021 added to the child tax credit to support America’s low-income families at the height of the COVID-19 pandemic. The policy was part of stimulus efforts injected into the economy to help mitigate the economic crisis. But legislators failed to extend the program after it lapsed.

“What happens when people don’t have to worry about what’s gonna happen to their child if they go to work, they have child care? The economy grows,” Biden said in a speech in Nevada on Tuesday.

The president said his administration’s expansion of the child tax credit helped reduce child poverty in the U.S. “Sending $300 checks per child, per family, per month to their pockets to help them get through the pandemic,” he said in his remarks. “I want to reinstate it and make the child care tax credit permanent. It cut child poverty in half for Black families, Latinos and Asians and tribal communities.”

Child poverty had declined to record lows in 2021, a drop that some experts explained was helped by the introduction of the child tax credit. The following year, child poverty more than doubled, according to the U.S. Census Bureau.

The lack of federal efforts to revive the tax credit did not stop some states from instituting their own version of the benefit to their residents.

“Fourteen states have enacted a child tax credit, and 31 states plus the District of Columbia and Puerto Rico have enacted their own version of the federal Earned Income Tax Credit,” the Center on Budget and Policy Priorities said in March.

The Biden administration has argued that it wants to make the support for children a fixture of American life. In March, the White House suggested that Biden wanted to enhance the credit from $2,000 to $3,000 per child for those age 6 and older, and to $3,600 per child for those younger than 6, according to a statement.

“[The] restoration of the full Child Tax Credit expansion would lift 3 million children out of poverty and cut taxes by an average of $2,600 for 39 million low- and middle-income families that include 66 million children,” the Biden administration said at the time.