Speaker Nancy Pelosi (D-Calif.) said Tuesday that House Democrats want to make the expansion of the child tax credit (CTC) permanent, after President Biden proposed extending the increased credit amount through 2025.
“We want to have it longer,” she said at a virtual event. The event was focused on making people aware that they should file tax returns by the May 17 deadline so that they can receive advance payments of the expanded CTC this year.
President Biden enacted a coronavirus relief law in March that includes a one-year expansion of the CTC. The law increases the credit amount from $2,000 to $3,600 for children under age 6 and to $3,000 for older children, makes the credit fully available to the lowest-income households, and directs the IRS to make advance payments of the credit on a periodic basis from July through December.
The current expansion of the credit is just for 2021. Biden released a proposal last month, called the American Families Plan, that calls for the CTC to permanently be fully available for the lowest-income families and proposes to extend the other parts of the CTC expansion, such as the higher credit amount, through 2025.
Many House and Senate Democratic lawmakers want to make the CTC expansion permanent, and have vowed to continue to push for permanence following the release of the American Families Plan. They say that the CTC expansion is important because it helps to reduce child poverty.
Pelosi said that House Democrats are pleased that a one-year expansion of the CTC has been enacted, and are also pleased that the Biden administration wants to extend the expansion. But she also said that House Democrats want more than just an extension through 2025.
An obstacle to making the child tax credit expansion permanent is the cost of doing so. Pelosi said that it would cost about $650 billion to make the expansion permanent in a bill based on Biden’s proposal, but that child poverty has an even greater cost to the U.S. of $800 billion to $1 trillion annually.
“We figure it’s a saving,” she said.
The source of the cost estimate for cementing the CTC expansion wasn’t immediately clear. Pelosi’s office said that the estimate of the cost of child poverty was included in a report from the National Academies of Sciences, Engineering, and Medicine.
Pelosi also encouraged people to file their 2020 tax returns by Monday’s deadline in order to ensure they receive advance payments of the CTC when the IRS starts making disbursements this summer.
The IRS separately on Tuesday also urged families to file tax returns promptly in order to receive advance payments of the credit.
Both Pelosi and the IRS highlighted the need for many low- and middle-income families who don’t normally file tax returns to do so this year.
The IRS said it will be making the advance payments of the CTC based on people’s 2020 tax returns, or their 2019 returns if the 2020 returns are not available.