The Covid-19 Relief Act, signed by President Biden on Thursday, provides for a greater increase in direct aid to families than any other pandemic relief bill passed to date – an average of $ 6,660 for households with children, according to an analysis of impartial tax policies.
For 500,000 poor families with two or more children, around $ 10,000 in aid will more than double their annual income. According to some estimates, the bill could cut child poverty in half this year.
The law accomplishes this in two main ways: by significantly increasing stimulus payments per child, and by providing a larger tax credit for children, which particularly benefits families with the lowest incomes.
The upcoming stimulus checks are bigger for adults than in the first two rounds – $ 1,400 per adult compared to $ 1,200 per adult in a bill passed in March 2020 and $ 600 per adult in December. The same income thresholds apply to receiving the full amount: $ 75,000 for singles, $ 112,500 for heads of household, and $ 150,000 for married couples, although check amounts for earners above these levels will expire much faster.
The largest increase is seen in children and other dependents. In the first two rounds, taxpayers received $ 500 and then $ 600 for each dependent child. This round includes $ 1,400 for every dependent child and adult, including college students.
And unlike in previous economic cycles, the child tax credit has been increased. It’s now worth $ 3,600 per child under 5 and $ 3,000 per older child, down from $ 2,000 per child. Low-income families will benefit most as they are now entitled to the full amount even if their tax liability is very low.
Previously, parents could deduct the $ 2,000 per child credit from their tax bill. If they don’t pay that much tax, they can get up to $ 1,400 in refundable credit. Now all parents receive the full amount, with half of the value of the loan issued in July starting in July.
The income thresholds for the full child tax credit are the same as for the stimulus payments. The credits for unmarried taxpayers earning $ 240,000 or more and married couples earning $ 440,000 will expire completely.