How child tax credits could continue in 2022
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WASHINGTON (WJW) — The final child tax credit payment of 2021 hits accounts this week. As it stands right now, payments will not continue into 2022. However, if the Build Back Better act passes the Senate, it would extend the child tax credits for direct payments in 2022. The House approved an initial version last month.
The Biden administration wants the bill approved before Christmas so families can plan on that money in the new year. "Our view is that the Child Tax Credit is a really basic, important support for families and we should extend it because it's doing what we hoped it would do," Brian Deese, director of the National Economic Council said in a Newsweek article last week.
The potential to pass the 10-year $2 trillion package took a hit Friday when the government announced that inflation pushed prices up last month at an annual rate of 6.9%, the highest in 39 years.
Senate Majority Leader Chuck Schumer, D-N.Y., has not said when he’ll call a vote.
Here’s what’s in the bill as it stands now:
Family and child care
- Eligible workers would receive up to four weeks of paid leave to reimburse them for time taken to care for a new child or other family members or to recover from illness. Biden had initially proposed 12 weeks of paid family leave.
- Federal subsidies would ensure that parents earning up to 250% of a state’s median income would pay no more than 7% of their income on child care. Parents must be working, seeking a job, in school or dealing with a health issue to qualify.
Education
- Universal pre-kindergarten would be established for all 3- and 4-year-olds and child-care subsidies would be provided for poorer and middle-income Americans. But the programs are funded only for six years.
- $40 billion would be provided for higher education and workforce development. This includes raising the size of Pell Grants and providing funding for historically Black colleges and universities as well as institutions that largely serve Hispanic students or tribal communities.
Environment/climate change
- Clean energy tax credits would receive $320 billion worth of funding. These credits over 10 years would help businesses and homeowners shift to renewable energy sources for electricity, vehicles and manufacturing.
- $105 billion would be spent to improve communities’ ability to withstand extreme weather events, which have been worsened by climate change. The funding would also create a Civilian Climate Corps that focuses on conserving public lands and bolstering community resilience to flooding, drought and other weather emergencies.
- $110 billion would help develop new domestic supply chains and develop new solar and battery technologies. Support would also be given to existing steel, cement and aluminum industries.
Health care
- Medicare would be expanded to cover hearing aids, costing an estimated $35 billion over 10 years.
- Out-of-pocket Medicare Part D costs for older Americans would be capped at $2,000 per year and the price of insulin reduced to no more than $35 a dose.
- A Medicare drug negotiation program would be established. Each year, the secretary of Health and Human Services would identify 100 brand-name drugs that lack price competition and from that list negotiate the price of up to 10 drugs in 2025, 15 in 2026 and 2027, and 20 thereafter.
- Expanded tax credits to help cover insurance premiums under the Affordable Care Act would be extended through 2025. The White House says that would help 3 million uninsured people gain coverage.
- $150 billion would be given to a Medicaid program that supports home health care, helping to clear a backlog and improving working conditions.
- $90 billion would go toward investments that would include funding maternal health, community violence initiatives, disadvantaged farmers, nutrition and pandemic preparation.
Housing
- $150 billion would be committed toward housing affordability with a goal of building more than 1 million new rental and single-family homes. The goal would be to reduce price pressures by providing rental and down payment assistance.
Tax breaks
- An expanded child tax credit would continue for another year. As part of a COVID relief bill, Democrats increased the tax credit to $3,000 per child ages 6-17 and $3,600 per child 5 and under. Households earning up to $150,000 per year get the credit paid to them on a monthly basis.
- The expanded Earned Income Tax Credit that goes to 17 million childless, low-wage workers would continue for one year.
Taxes
- Biden’s plan bolsters the IRS to improve collections and close the gap between taxes owed and taxes paid.
- A 15% minimum income tax would be applied to large corporations. The U.S. would also be aligned with an agreement reached by more than 100 countries designed to deter multinational companies from stashing profits in low-tax countries.
- The bill would create a new surtax on multimillionaires and billionaires and close a provision that allows some wealthy taxpayers to avoid paying the 3.8% Medicare tax on their earnings.
- A $10,000 cap on state and local tax deductions would be raised to $80,000. Tax analysts say the change would largely benefit high-income households.
- A 1% surcharge would be imposed on corporate stock buybacks, which Democrats said are often used by corporate executives to boost their finances rather than investing in the business and its workers.
Immigration
- Those who entered the United States prior to Jan. 2, 2011, and have continuously resided there since would be eligible for renewable parole grants for five years after paying an administrative fee and completing security and background checks. The parole status gives recipients authorization to travel and work in the U.S. and deems them eligible for a Real ID-compliant driver’s license or a state identification card.
The Associated Press contributed to this report.