By Mary Stroka
(The Center Square) – Iowa families began automatically receiving monthly payments of $250 or $300 per child on July 16 under the American Rescue Plan, which increased the existing Child Tax Credit.
In total, Iowa families will receive $156.9 million, with an average payment amount of $458 per family per month, according to the U.S. Department of the Treasury.
Families that make up to $150,000 for a couple or $112,500 for a single-parent family are eligible for payments, which increased from $2,000 to $3,000 per child over age 6 and from $2,000 to $3,600 per child under age 6. The age limit for the credit also rose, from 16 to 17.
About 669,000 children (93%) in Iowa qualify for the tax credit expansion, according to an analysis from the Center on Budget and Policy Priorities. That includes 520,000 White children, 31,000 Black children, 69,000 Latino children, 16,000 Asian children, and 33,000 of another race or multiple races. The Center reported that 198,000 children under 17 who were not include in the $2,000 Child Tax Credit prior to the expansion would benefit and that 48,000 children would be “lifted above or closer to” the poverty line by the expansion.
Biden’s American Family Plan would make the Child Tax Credit permanently fully refundable and extend the increases through 2025. The plan would also permanently increase the Earned Income Tax Credit for adults not raising children in their homes from “roughly $540 to roughly $1,500, and the income cap for these adults to qualify from about $16,000 to at least $21,000,” the Center said. In Iowa, 181,000 workers without children would benefit from that expansion, including 159,000 White workers and 9,000 Black workers.
State Treasurer Michael Fitzgerald wrote an editorial July 13 encouraging Iowa families to consider investing in a College Savings Iowa 529 plan account. Participants who are Iowa taxpayers can deduct up to $3,474 (adjusted annually for inflation) per beneficiary when they determine their 2021 adjusted gross income, he said.
Iowa Democrats have praised the expansion.
“The Child Tax Credit will provide direct payments to 85% of Iowa’s children,” Rep. Cindy Axne, D-IA-3, tweeted July 20: “I’m proud to have supported this legislation because it will help families pay for the rising costs of daycare, save for college, and so much more.”
Families can choose to save the full child tax credit in 2022 can unenroll from receiving advance payments on the IRS website. Eligible families who don’t typically file tax returns can use a tool on the IRS website to register for the payments.
