Will There Be No More Child Care Tax Credits?

The child tax credit, a nonrefundable tax credit for taxpayers with dependent children under 17, is set to expire at the end of the year if Congress doesn’t act. The American Rescue Plan raised the maximum Child Tax Credit in 2021 to $3,600 for children under 6 and $3,000 per child for children between ages. The fate of extending the credit expansion lies with the U.S. Senate, which has yet to vote on the Build Back Better Act, legislation that passed.

The Child Tax Credit is one step closer to getting an overhaul, with the House approving a bill that would expand the valuable credit for parents. The tax package would need 60 votes to pass. The maximum tax credit available per kid is $2,000 for each child under 17 on Dec. 31, 2023. Only a portion is refundable this year, up to $1200. The Child and Dependent Care Tax Credit can save families up to $1200 in 2024 when they hire a nanny or other child care provider.

The House approved bipartisan legislation to expand the credit Wednesday, but Senate passage isn’t assured. If you successfully apply for Tax-Free Childcare, your Working Tax Credit or Child Tax Credit will stop straight away. For 2021, the credit is refundable for eligible taxpayers, meaning that even if your credit exceeds the amount of Federal income tax that you owe, you can still claim the credit.