U.S. House Passes Temporary Expansion of Family Tax Credits in COVID-19 Relief Package

By Devin Simpson

Last week, the U.S. House of Representatives passed a new federal COVID-19 relief package that includes temporary expansions of the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), and Child and Dependent Care Tax Credit (CDCTC).

The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act offers relief to individuals and businesses affected by the coronavirus pandemic and attempts to fill in some gaps of the CARES Act, which Congress passed in March. To help workers impacted by the economic downturn, the legislation includes temporary changes to three family tax credits. The legislation would almost triple the value of the EITC for workers without dependent children, lower the minimum eligibility age from 25 to 19, increase the maximum eligibility age from 65 to 66, and allow taxpayers to calculate the value of their credit using either their 2019 or 2020 earnings. To provide additional help for families with children, the legislation would increase the value of the CTC to $3,000 per child older than 6 years old and to $3,600 per child younger than 6 years old, and make the credit fully refundable. Lastly, the legislation would make the CDCTC fully refundable and increase the maximum credit from $3,000 to $6,000.

Since the start of the coronavirus pandemic, tax policy experts have highlighted the EITC and CTC as common-sense policy tools to combat widespread job and income losses while boosting the economy. What’s more, research has shown that children will be one of the groups most impacted by rising poverty rates, and these credits have been proven to lift families with children out of poverty and improve long-term educational and health outcomes.

Read the full bill here.