What Is the Child Tax Credit?
The child tax credit is a tax benefit granted to American taxpayers for each qualifying dependent child.1 Designed to help taxpayers support their families, this credit was greatly expanded for 2021 taxes by the American Rescue Plan Act of 2021 (ARPA).2 It is estimated that the new rules will reduce by 45% the number of American children living in poverty.
The child tax credit decreases taxpayers’ tax liability on a dollar-for-dollar basis. ARPA increased the maximum annual credit from $2,000 per child (under age 17) in 2020 to $3,000 per child (under age 18) or $3,600 (children younger than 6) for 2021 and made the 2021 credit is fully refundable.
