Tax Breaks for Parents May Return to Help Ease Financial Hardships

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Brea Turner, a struggling college student, and mother, is hoping for the return of the COVID-era child tax credit to alleviate her financial burdens.

Tax Breaks for Parents
Tax Breaks for Parents ( Photo: University of Rochester )

The enhanced benefit, which provided monthly payments of up to $300 and annual tax breaks for parents of up to $3,600 per child, ended last year

However, Washington lawmakers are seriously considering restoring it to its 2021 level. Currently, the credit is no longer paid monthly and is capped at $2,000 per year per child. Turner, a community health education major, emphasized the impact of the previous tax breaks for parents, stating that it helped keep her refrigerator stocked and her daughter clothed. Despite her husband’s 60-hour workweek and her part-time job at the campus health center, they still struggle to cover basic living expenses.

The proposed increase in the tax breaks for parents could potentially benefit around 14.7 million Californians, according to the Institute on Taxation and Economic Policy. President Joe Biden and Democratic leaders have long advocated for expanding the tax breaks for parents, and many Republicans also support the idea due to its positive effect on families.

Although the legislative process for the increase is still underway and subject to change, there is bipartisan support for the credit’s expansion. The major hurdles to overcome are the associated costs and debates about whether it effectively targets those in greatest need of tax breaks for parents.

Representative Darrell Issa, a Republican from Vista, is focused on restoring the deduction for in-state and local tax payments, known as the SALT issue, instead of solely concentrating on the tax breaks for parents

Meanwhile, supporters of the expanded credit argue that closing tax loopholes can make up for any lost revenue. The restored tax breaks for parents would provide significant relief for struggling parents like Turner, enabling them to worry less about putting food on the table and allocate more time to their studies. During 2021, the tax breaks for parents effectively reduced child poverty rates and positively impacted various racial and ethnic groups.

Negotiations are ongoing, as Democrats are unlikely to accept any package of tax cuts that does not include the child care plan. If the Democratic plan is implemented, the tax breaks for parents would primarily benefit taxpayers with incomes below $155,100, with average savings estimated for different income brackets. These potential changes aim to alleviate financial hardships faced by parents and promote economic stability for families across the nation.

 

READ ALSO: Preparedness Bill Draft Released As Negotiations Continue

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