Democrats must now get creative if they want to preserve the expansion of the Child Tax Credit
There are four main components to the ARP’s CTC expansion. First, it increased the CTC from $2000 to $3000 for couples making under $150,000 and allowed 17-year-olds to qualify for the credit. Second, it provided an additional $600 – bringing the total CTC to $3600 – for children under age 6. Third, it made the CTC fully refundable so low-income families could receive the full credit even if it exceeds their income tax liability.
Making all these changes permanent would cost roughly $100 billion each year until 2025, and nearly double that amount in later years. The cost jumps because a temporary increase in the CTC from $1000 to $2000 that was included in the 2017 GOP tax bill expires in 2025. By making the ARP CTC levels permanent, Democrats would effectively be paying for the cost of making the last CTC expansion permanent as well as the cost of any new expansions they wish to enact on top of it.
One easy way for Democrats to offset the elevated costs of expanding the CTC after 2025 would be by extending changes to dependent exemptions, personal exemptions, and the standard deduction that are also set to expire in 2025.
Extending those offsets would be a common-sense way to cut the cost of making the ARP’s CTC expansion permanent by
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