Parents of children under age 6 will receive up to $300 a month and parents of kids ages 6 to 17 will receive up to $250 a month. The child tax credit is expected to drastically reduce child poverty in the U.S.

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President Joe Biden campaigned on the promise to provide significant help to American families. Now, his new coronavirus stimulus plan will deliver up to $300 per month per child for parents, starting on July 15.

The president's stimulus package recently passed earlier this year, totaling $1.9 trillion in coronavirus aid. And the package includes an expansion of the child tax credit that would benefit many American families. Each month, depending on income level, parents of children age 5 and under will now receive up to $300 and parents of kids ages 6 and 17 will receive up to $250. That's a total of $3,600 for each child under age 6 and $3,000 per year for each older child (between ages 6 and 17).

The payments will begin on July 15, and they will be issued monthly on the 15th—unless that date is a weekend or holiday—through December. About 39 million households will receive the payment, either through direct deposit, paper checks, or debit card. Families can head to the IRS website to see if they qualify and make any changes or updates to their account. And families who don't normally file tax returns can use the IRS' online Non-filer Sign-up tool to register for these payments. 

"The American Rescue Plan is delivering critical tax relief to middle class and hard-pressed working families with children," said President Biden in a statement. "With today's announcement, about 90 percent of families with children will get this new tax relief automatically, starting in July."

How Does It Work?

The payments come from expanding child tax credits, meaning parents would receive monthly payments from the Internal Revenue Service (IRS). And unlike the one-time coronavirus payments, this program would continue for an extended period of time. Indeed, President Biden wants Congress to approve the American Families Plan—a $1.8 trillion economic package that will extend the payments for four more years.

"While the American Rescue Plan provides for this vital tax relief to hard working families for this year, Congress must pass the American Families Plan to ensure that working families will be able to count on this relief for years to come," Biden said in the statement. "For working families with children, this tax cut sends a clear message: help is here."

Biden's plan reduces the amount of money parents pay in taxes, paying them back the $3,600 or $3,000. Single parents making up to $75,000 a year, heads of household making up to $112,500 a year, or couples who make up to $150,000 a year will receive the full amount (those earning more will receive less according to their income bracket)—with no minimum income. Child tax credits currently leave many families out, so the new expanded credit will give a break to the millions of families who don't earn enough money to use the credit.

Currently, the child tax credit offers single parents making less than $200,000 up to $2,000 per child and the same for married couples making less than $400,000 filing together (the payments are normally given as annual tax refunds). So the changes would mean an increase of about $1,000 for many families. Plus, the new expanded credit allows families to choose whether to receive a lump sum with their tax returns or monthly payments in installments.

An image of a stimulus check on a colored background.
Credit: Getty Images (1).

How Would It Help?

More than one a year into the pandemic, families are struggling. The cost of daycare has increased and many parents have either lost their jobs or been forced to leave the workforce to care for children who are virtually learning.

Research on the expanded credit when it was first proposed suggested that the plan could cut child poverty in half in the United States. And since the U.S. has nearly 11 million children living in poverty—and one of the worst rates of child poverty compared to other countries with similar wealth—that would be an impactful change. Reducing the number of children in poverty by up to 54 percent (like the research suggests it could) would mean bringing 5 million children out of poverty.

What Happens Next?

Parents can expect to see the first months checks starting July 15. They'll continue receiving monthly payments on the 15th, unless it's a weekend or holiday. If Congress approves the American Rescue Plan, families could continue receiving the payment for at least four more years.

"The president is interested in exploring options for making the child tax credit permanent as part of the 'Build Back Better' agenda," White House press secretary Jen Psaki said in press conference in March. "He's been heartened to see bipartisan support for ideas like this, including from Republicans like Sen. Romney."

Other countries that have similar universal child benefit programs include Canada (up to $4,800 per child each year), Ireland ($4,060), the Netherlands ($2,400), and more nations in Europe.