What the Child Tax Credit Will Mean to Military Families Moving Forward

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In 2021, the American Rescue Plan Act (ARP) expanded the Child Tax Credit (CTC) significantly for one year, making it the largest U.S. child tax credit ever and providing most working families with $3,000 per child under 18 years of age and $3,600 per child six and younger.

The ARP also made the credit fully refundable and provided tax credit options for families to take half the credit in six monthly payments. Since July 15, 2021, 39 million households with 65 million children – 88% of children in the United States – automatically received payments of between $250 and $300 if they had chosen to.

However, the CTC was enhanced for one year, 2021, and without further expansion or adoption of President Biden’s Build Back Better Framework this year, the Child Tax Credit will revert from $3,600 per eligible child to its original maximum amount of $2,000. Changes back to pre-pandemic policies will have a significant impact on military families who are already struggling to provide basic needs for their children.  

According to the Center on Budget and Policy Priorities, 5 million children from 2.6 million veteran and active-duty families will lose out if the enhanced Child Tax Credit is not extended.

The reversion to pre-ARP benefits will be significant for the one million military children who were to receive full value of the credit for the first time. Now, they are only eligible to receive a partial credit or none because their family incomes were too low or they lacked earnings in the year.

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For the 2021 tax year, minimum earnings requirements were waived for the Child Tax Credit, making the credit available to a greater number of recipients. A recent poll conducted by the Bipartisan Policy Center and Morning Consult found that 63% of parents who qualified for the CTC in 2021 said that the credit had a large impact on their family’s finances.

With ever-rising costs for food, gasoline, housing and other necessities squeezing consumers and threatening the economy, and inflation in the United States likely to be another four-decade high for March, many low-income military families will be hit particularly hard. Having earning requirements reinstated hurts the families who need CTC funds the most, including many veteran and active-duty military families already concerned with food insecurity and not being able to adequately budget their finances.

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