Monthly child tax credit payments have ended. Here’s why lawmakers face hurdles to add more

A group of New Hampshire parents and others gather outside of a senator's office.

Democrats on Capitol Hill will have to find common ground when they regroup in the new year.

The enhanced child tax credit was temporarily increased to $3,000-to-$3,600 per child as part of Covid-19 relief enacted earlier this year, and leaders will discuss whether to extend it in the negotiations.

The Bipartisan Policy Center's director of economic policy said that the child tax credit is a sticking point.

Personal Finance has more.
Some Americans may get more money this tax season.
10 million children will fall into poverty when the child tax credit ends.
Parents are concerned about the end of child tax credit checks.

Democrats want to move the package through via reconciliation or a simple one-party majority, which is the reason for the difficulty. Every Democrat in the Senate and House needs to agree on it.

Manchin said he wouldn't vote for the bill in its current form. The child tax credit proposal has been taken issue by him due to high costs.

The clock is running for families who rely on the monthly checks of up to $300 per child.

More than 36 million families received the last monthly payments this month.

Congress needs to pass new legislation to authorize more payments.

Ed Mills, Washington policy analyst at Raymond James, said that it is politically the least popular part of the program. Democrats hope that the popularity will change once checks don't get deposited in January.

The child tax credit will be worth $3,000 per child ages 6 through 17 and $3,600 per child 5 and under.

Lawmakers have sweetened the credit before. The Tax Cuts and Jobs Act was passed by President Donald Trump and increased the per child cost from $1,000 to $2,000.

The child tax credit has traditionally been bipartisan, but there are some sticking points that have created dissention.

tinkering with the availability of the credit to those at higher income levels seems like it could be part of the solution.

Minimum income requirements were removed in order to get more money for families. The minimum earnings to qualify for the credit has been raised. The full credit was made fully refundable so that people can access it regardless of their income or tax liability.

Critics have said those terms could make it hard to work. The University of Chicago estimated that 1.5 million workers could leave the work force.

The Bipartisan Policy Center has a proposal that would make the credit available to everyone at the bottom end of income levels and then phase in with additional money with higher incomes.

Critics are not happy with the fact that higher income families can access the credit.

The child tax credit is only available to taxpayers who have an adjusted gross income of $150,000 or more. For people with incomes over those thresholds, the original credit amount is phased out.

The credit is reduced to less than $2,000 per child for people with incomes of more than $400,000 if they are married and filing together.

Akabas said that some tinkering with the availability of the credit to those at higher income levels might be part of the solution to reduce the total cost.

Parents who rely on monthly payments may be shocked in January.

The IRS wants to get more monthly payments out by January 15.

The remaining sums will be available when the families file their taxes. The second half of the credit is usually given to those who received the monthly payments.

It is not known what kind of compromises may emerge.

If the enhanced credit ends, 10 million children could be in poverty, according to the Center on Budget and Policy Priorities.

If the policy goal is surrounded by poverty and hunger, then targeting it to lower-income households seems to be the most logical thing to do.

If the child tax credit expansion is not included in Build Back Better, they may try to get it through bipartisan legislation. Romney said he would work with both parties to create a long-term, fiscally-responsible reform.

Efforts could take well into the first half of the year, Akabas said.

Akabas said that time is of the essence in terms of reaching a resolution so that families can have certainty about what their finances look like going forward.