Across the country, service providers, schools and other community partners like yours continue to help families claim the expanded 2021 Child Tax Credit (CTC). As you support families in claiming the money that is still on the table, you may be wondering about the future of the expanded CTC and whether families will be able to count on this money moving forward.
The Senate and House recently passed the Inflation Reduction Act of 2022. The legislation contains critical climate, health and tax provisions that will support families now and into the future. Learn more about the Inflation Reduction Act through this recent report by the Coalition on Human Needs. While the legislation will help families facing rising prices, high health care costs, and climate change’s far-reaching impacts, a number of important policies are conspicuously absent, including an extension of the expanded CTC. It is deeply frustrating that legislators let lapse a policy that so dramatically – if temporarily – reduced childhood poverty and hunger. While we are bitterly disappointed, we also see a path forward for the expanded CTC made possible by advocates’ successful efforts to exclude research and development (R&D) business tax breaks from the Inflation Reduction Act.
Because the bill did not include R&D tax cuts, the business community will negotiate for their inclusion in an end-of-year tax package. This provides advocates for children and families the opportunity and leverage to fight for an expanded CTC. As corporate interests push for an extension of R&D tax breaks, constituents and advocates will demand that legislators only allow breaks for corporations if they also provide substantial relief to families through an expanded CTC. While an end-of-year tax bill will not likely include a permanent expansion of the CTC, advocates will be pushing for a fully refundable credit that, like the 2021 CTC, provides significant support to families with the lowest incomes. There is precedent for such a deal: in 2015, some members of Congress and outside advocates insisted on including a CTC expansion within a package of business tax break extensions, and their efforts succeeded.
As we strive to help all eligible families get the 2021 CTC, we are encouraged by the possibility of an expanded CTC victory later this year. We have our work cut out for us – both in helping families claim the money to which they are already entitled and in ensuring future support for kids and families. As you plan your work for 2023, please keep in mind both the possible opportunity to tell families the good news about a newly expanded 2022 tax year credit, and the need to communicate to families that they can still claim the 2021 CTC (if they have not done so already) until 2025.