Thanks to monthly child tax credit payments beginning this month, U.S. retailers could soon see an uptick in sales if the payments act as a stimulus that encourages Americans to spend on food, clothes, school supplies and other items, CNBC reported.
The recent child tax credit expansion increases the benefit from the typical $2,000 annual credit to $3,000-$3,600 per qualifying child, depending on the child’s age. Half will be paid out in monthly payments beginning July 15 and continuing until December 15. You’ll claim the other half of the credit when you file your 2021 tax return.
The expanded credit was passed as part of the American Rescue Plan and was intended to help fight child poverty. The payments will be the latest government-funded benefit paid to Americans. Big retailers like Walmart and Best Buy reported increased sales after consumers received stimulus payments, CNBC pointed out.
According to the IRS, as reported by CNBC, about 39 million households, which include nearly 90% of children in the U.S., will receive a total of $110 billion through the enhanced child tax credit, with $55 billion of that paid out through the monthly payments, CNBC reported, citing the Joint Committee on Taxation.
These payments will be especially helpful for moderate- and low-income families, Jim Sullivan, an economics professor at the University of Notre Dame, told CNBC. Sullivan noted that these families tend to spend money immediately on necessities like food, rent and monthly bills.
Retailers like Walmart are optimistic about consumers’ overall desire to start shopping again as the pandemic eases. “In the U.S., customers clearly want to get out and shop. We have a strong position as our store environment improves and eCommerce continues to grow,” Walmart President and CEO Doug McMillon stated in a release. He added that the company anticipates “continued pent-up demand throughout 2021.”
More From GOBankingRates