The expanded child tax credit is a major part of the Democratic spending agenda and is set to expire after Sen. Joe Manchin said he won’t vote for the legislation. So what exactly do those payments entail?

The child tax credit has been around in various iterations for years now, but its most recent revamp as part of President Joe Biden’s COVID-19 relief legislation earlier this year has been the most expansive.

It began with bipartisan support back in 1997 under President Bill Clinton. Those with children who met certain criteria were allowed to deduct the tax credit from their federal income taxes. Back then, the credit was nonrefundable, meaning that if the filer’s credit was higher than the amount of taxes owed, they would not receive a cash reimbursement. Under President George W. Bush, the child tax credit increased from $500 to $1,000 and was made partially refundable for certain low-income taxpayers.

Over the years and under subsequent administrations, the child tax credit, popular among lawmakers of both parties, was subtly changed and expanded, but Biden’s iteration of the benefit was the most sizable.


The credit was expanded as part of the American Rescue Plan Act, which passed Congress on a party-line vote with Democrats using a budgetary maneuver called reconciliation to jam it through the Senate and on to Biden’s desk with nary a Republican vote.

Prior to this year’s expansion, families received a credit of up to $2,000 per child under age 17. The expansion imposed as part of the coronavirus relief plan offered families $3,600 for children under 6 and $3,000 for older children, with perhaps the biggest change being the removal of an income threshold for those who receive the funds. Thus, a family with no income or head of household working would also receive the full $3,600 or $3,000 payments.

By removing the income threshold, Biden made many more impoverished families eligible for the benefits than prior to its expansion. The Center on Budget and Policy Priorities predicted that the expansion would move an additional 4.1 million children above the poverty line and cut the number of impoverished children by more than 40%.

Another key change in the child tax credit was how it was refunded. Families were eligible for monthly direct payments of up to $300 per child under the age of 6 and $250 per child for those between the ages of 6 and 17.

Despite plaudits for the expansion on the Left, some Republican critics claim that the lack of the requirement of earnings and the switch to monthly direct payments amounted to welfare without work requirements.

When the expansion was approved by Congress and signed into law earlier this year, it was only scheduled to last through the end of the year, and Democrats on Capitol Hill quickly made it a top priority to push the expansion into the future. Even back in April, before Biden’s legislative agenda was fully rolled out, a group of Democrats said that a “permanent extension” of the child tax credit would be their “priority.”

That extension was planned to have come in the form of Biden’s Build Back Better Act, a climate and social spending bill that would have added $3 trillion to the debt over a decade if programs within it were permanent as Democrats intended, according to the Congressional Budget Office. Manchin’s recent announcement that he would not support the spending legislation immediately imperiled the fate of the expanded child tax credit as the two were tethered, and now the Democratic Party is scrambling to find a solution.

Some are hoping that extending the child tax credit will be done using a separate legislative mechanism than other parts of the Build Back Better agenda, although its fate remains uncertain due to Manchin’s past statements on the matter. During negotiations with the White House, Manchin provided a counteroffer that did not include an extension of the tax credit, the Washington Post reported this week.

One of the major concerns Manchin, who has had outsize influence in legislative negotiations, had about the expanded tax credit was the fact that it lacked a work requirement. He has also implied that the income thresholds in play before the credit starts phasing out were too extreme.

“Do you believe people making $200,000 and $400,000 should still get the child tax credit the same as someone making $50,000, $60,000, or $70,000 that really needs it?” Manchin asked during a recent radio appearance.

For its part, the White House is holding the line on the expanded child tax credit. It is hoping that Congress can come to some sort of agreement on the matter before the payments expire, and White House press secretary Jen Psaki has emphasized that Biden is fully behind the revamped credit.


“I would say that the president, of course, wants to extend the child tax credit,” Psaki said earlier this week. “That’s something he has spoken to. We know that it was a significant contributor to cutting in half the child poverty rate. I’m obviously not going to negotiate from here, but, you know, he doesn’t think ‘compromise’ is a dirty word, either.”

If it had been extended, the next monthly child tax credit payments would have been set to go out to families on Jan. 15. Congress is out of session for the holidays but will reconvene on Jan. 10.