Biden’s American Families Plan Extends Expanded Child Tax Credit

A pre-school age girl helps her parents pick out veggies in the produce section at the grocery store.
FatCamera / Getty Images/iStockphoto

President Biden asked for an extension of the expanded Child Tax Credit during a speech before a joint session of Congress last night, where he introduced his American Families Plan.

See: Biden’s New Families Plan — How Will It Actually Affect Your Kids?
Find: House Bill Pushes to Make Child Tax Credit Permanent

In March we expanded a tax credit for every child in a family. Up to a $3,000 Child Tax Credit for children over 6 — and $3,600 for children under 6,” he said. “With two parents, two kids, that’s up to $7,200 in your pocket to help take care of your family.” 

The tax credit was expanded temporarily, for 2021 only, as as part of Biden’s $1.9 trillion American Rescue Plan COVID stimulus and relief package. In addition to increasing the amount of the existing credit from $2,000, the expansion increased the maximum age of eligibility from 16 to 17 and made the credit fully refundable. A maximum of $1,400 is refundable under the regular credit.

“This will help more than 65 million children and help cut child poverty in half this year,” Biden said.

See: What to Do With the $3,000 Child Tax Stimulus
Find: $3,600 Stimulus Payments for Families to Start in July

Biden called for the expansion to be extended beyond 2021. “Together, let’s extend the Child Tax Credit at least through the end of 2025,” he said

Make Your Money Work for You

Biden also included proposals on free and subsidized child care as well as education in last night’s speech.

He stated that the American Families Plan “will guarantee four additional years of public education for every person in America.” This would begin with two years of free pre-school for every 3- and 4-year-old child.

See: Should Stay-at-Home Moms Get Basic Income? Experts Weigh In
Find: One Year Into Pandemic, Nearly Half of Americans Still Financially Struggling

This would then continue with two free years of community college. “And we will increase Pell Grants and investment in Historically Black Colleges and Universities, Tribal colleges, and minority-serving institutions,” Biden added.

The plan will also provide access to child care. Biden pledged that “low- to middle-income families will pay no more than 7% of their income for high quality care for children up to the age of 5.” He added that families most in need will pay nothing.

See: Community College Could Be Free With Biden’s American Families Plan
Find: ‘Pandemic Parenting’ Has Reshaped the Workforce, Survey Shows

The American Families Plan will also provide up to 12 weeks of paid family and medical leave. Although he gave no specific details given during the speech, Biden did add that this would include care for a parent, spouse or child.

Make Your Money Work for You

Following Biden’s speech, Senator Tim Scott (R-S.C.) delivered the Republican rebuttal. Scott expressed discontent with the spending and taxing that would be necessary to implement the American Families Plan, and he said the plant would eventually “put Washington even more in the middle of your life — from the cradle, to college.”

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About the Author

Georgina Tzanetos is a former financial advisor who studied post-industrial capitalist structures at New York University. She has eight years of experience with concentrations in asset management, portfolio management, private client banking, and investment research. Georgina has written for Investopedia and WallStreetMojo. 

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