If the Republican plan passed some families may end up worse off, according to an analysis of the plan.
Millions of Families benefited from the monthly child tax payments that were up to $300 a month per child. Unfortunately, that incentive expired in December 2021. Now the Republican Senate has presented a proposal to restart the monthly tax payments, but the requirements to receive the payments. If you recall under the original plan, the monthly payments started in July and ended in December, with families receiving in cash up to half the credit's total value of $3,600 per child under 6 and $3,000 per child ages 6 through 17.
Under the Republican Senators' plan, families would receive $350 per month per child up to age 5, for a total of $4,200 per year. They would receive $250 per month for children ages 6 through 17, for a total of $3,000 per year.
If families desire to receive the full benefit, families would have to earn $10,000 in the previous year. Those families who earn less than $10,000 would have their credits reduced proportionally to their earnings.
What is going to be cut?
The Center on Budget and Policy Priorities stated, that there are some major issues with the Republican plan. They are proposing cuts to the earned income tax credit, and Eliminating head of household tax filing status.
The Center on Budget and Policy Priorities has provided an example below of how this will negatively impact millions of families.
Imagine a mother earning $25,000 per year with a toddler and daughter in second grade would qualify for a $3,640 child tax credit, but would lose $4,105 from the earned income tax credit cuts, resulting in a $465 net income loss, according to the Center on Budget and Policy Priorities. If both children were age 6 or over, the net income loss would be $1,665.
Under this plan, it is estimated around 7 million families earning less than $50,000 would end up worse off the Republican plan compared with current law, according to the Center on Budget and Policy Priorities.