How much the credit could be worth for families
The new law would expand refundable credit eligibility for larger families and if income drops in 2024 or 2025, taxpayers can use earnings from the prior year to calculate their maximum credit.
“It’s extremely well-targeted to provide significant relief to millions of low-income families,” said Chuck Marr, vice president for federal tax policy for the Center on Budget and Policy Priorities.
If enacted, the proposed legislation could benefit roughly 16 million children in low-income families during its first year, according to a projection released Tuesday from the Center on Budget and Policy Priorities.
Childhood poverty more than doubled in the U.S. in 2022 — surging to 12.4% compared to 5.2% in 2021 — after pandemic relief expired.
‘Not much time in a best-case scenario’
With proposed retroactive changes for 2023, there’s pressure to enact the legislation by the opening of tax season on Jan. 29. “But there’s not much time in a best-case scenario,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
There are limited vehicles to pass the legislation and passing a stand-alone bill could be more challenging amid other priorities. “That’s the big risk here — this ends up taking a backseat or dying to other concerns,” Watson said.
Lawmakers are facing two fiscal-year 2024 deadlines to pass spending bills to avoid a partial government shutdown, with the first quickly approaching on Jan. 19.
Don’t miss these stories from CNBC PRO: