The child tax credit was enacted more than 20 years ago to help parents with the everyday expenses of raising children. The 2021 American Rescue Plan expands the credit amount for one year, from $2,000 per child to $3,600 for younger children and $3,000 for older kids. It also increases the number of families who qualify for the credit and changes the way parents receive the funds.
The expanded tax credit is available to families who did not previously qualify because their income was too low. This change makes the credit available to an additional 23 million children living in poverty. Parents who did not file taxes in 2019 or 2020 can use the IRS non-filer sign-up tool to receive the benefit.
In another change, families who qualify for the tax credit are receiving monthly checks or bank deposits July through December of this year, and will receive the remainder of the credit amount when they file their 2021 tax returns. Delivering payments in installments is intended to help parents better meet their children’s needs by boosting their monthly income.
Experts at Columbia University estimate that the expanded tax credit—through increased payment amounts and by reaching more children—could potentially help lift half of children out of poverty, with the largest reductions seen for Black, Hispanic and Native American children.
More information for parents with questions about their eligibility for the child tax credit
