American Family Act would bring back expanded Child Tax Credit, make other improvements 


June 8, 2023

More than 200 House members this week signed on to legislation that would once again expand the Child Tax Credit, a move that would comprehensively reduce child poverty in the U.S. 

The American Family Act (AFA) was introduced Wednesday by Reps. Rosa DeLauro (D-CT), Suzan DelBene (D-WA), and Ritchie Torres (D-NY). You can read the text of the AFA here, and an accompanying fact sheet here. The legislation comes as House Republicans are preparing to bring forth legislation to extend some Trump tax cuts passed in 2017, including cuts favored by large corporations.

As was temporarily the case under the American Rescue Plan passed in 2021, the AFA would expand the amount of the CTC from $2,000 per year to $3,600 for children under 6 years old, and to $3,000 for children over 6. It would also eliminate earnings minimums for recipients.  Under current law, families can be too poor to get the help of the CTC; they must have earnings of at least $2,500 to claim the credit.  In another way the current CTC provides less help to families with low incomes, those with earnings above the $2,500 minimum but so low that they do not owe federal income taxes do not get the full credit; in 2023 they would get no more than $1,600 per child.  The American Family Act would provide the full $3,000 – $3,600 per child even if the family has no or little earnings, and would provide monthly payments instead of requiring recipients to wait until filing their taxes to receive the benefit. 

But this proposed version of an expanded CTC is new and improved over the temporary expansion passed as part of the American Rescue Plan. It would index the amount of the CTC to inflation, to preserve the value of the credit moving forward. It would extend the credit to families living in all U.S. territories. And it would guarantee that all children receive the same value of the credit in their first year of life, regardless of what month they are born. 

DeLauro said the expanded CTC during the pandemic lifted nearly 4 million children out of poverty when it was in effect. “It provided unprecedented economic security for American families,” she said in a news release. “It was the largest tax cut for middle-class and working families in generations. 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.”

Between July 2021 and December 2021, parents were eligible to receive monthly payments of $250 for children over 6 and $300 for children under 6; more than 61 million children in more than 36 million households received the benefits. The Center on Poverty and Social Policy at Columbia University estimates that the expanded CTC kept 3.7 million children out of poverty during this time period, and child poverty dropped by 30 percent. 

But when the payments ended at the end of 2021, child poverty rose, researchers found. Between December 2021 and January 2022, it rose a shocking 49 percent – from 12.1 percent to 17 percent. 

“No government program has impacted so many Americans in such a short period of time,” Torres said. “Making the Child Tax Credit permanent provides much-needed stability for working families, helps them make ends meet and fight rising costs, and reduces child poverty. I can’t think of a more worthy cause than helping meet the basic needs of children – our future – so they can learn, grow, and reach their fullest potential.” 

One interesting note: A study by Moody’s Analytics released last fall found that American families were paying $445 more per month for the items they purchased than the previous year. 

The average monthly benefit from the CTC between July 2021 and December 2021? $444 – meaning for families with children, an expanded CTC would sure go a long way toward easing the bite of inflation. 

Child Tax Credit expansion