Tax Credits for Working Families are a Pillar of the President’s Latest Tax Plan
January 20, 2015Print
By Lauren Pescatore
This weekend, President Obama unveiled a series of tax reforms that seek to reduce the burden our current tax code places on middle-class workers and their families. The plan would eliminate certain tax loopholes that are available only to wealthy individuals and large corporations while expanding and improving benefits for lower- to middle-income workers.
Last year, the President proposed expanding the Earned Income Tax Credit (EITC) for noncustodial parents and workers without children, an idea endorsed by House Ways and Means Committee Chairman Paul Ryan and other members of Congress from both sides of the aisle. The President’s latest tax plan incorporates his EITC proposal, doubling the credit for workers without children and lowering the age requirement to 21. The White House estimates that this expansion would reduce poverty and hardship for 13.2 million low-income workers while promoting employment.
The President’s plan also includes making permanent certain improvements to the EITC and Child Tax Credit scheduled to expire in 2017. The Center on Budget and Policy Priorities estimates that more than 16 million people – including nearly 8 million children – would be pushed further into poverty if these key improvements are allowed to expire.
Also under the plan, the maximum Child and Dependent Care Tax Credit (CDCTC) for middle-class families with young children would triple, increasing to $3,000 per child. The full credit – for young children, older children and elderly or disabled adults – would be made available to most middle-class families, most of whom do not currently qualify. According to the White House, these child care tax proposals as a whole would benefit 5.1 million families, helping them cover child care costs for 6.7 million children – including 3.5 million children under 5.
For full details on the President’s latest tax plan, click here.