The Child Tax Credit expansion did not pass Congress as a permanent law

The expanded Child Tax Credit that gave families up to $3,600 per child in 2021 and 2022 ended after those two years. Congress did not extend it beyond December 31, 2022. Starting in 2023, the credit returned to its previous structure: up to $2,000 per child under 17, with income limits that phase out the credit for higher earners.

The expansion was part of the American Rescue Plan, passed in March 2021. It increased the credit amount, lowered the age limit from 16 to under 17, and allowed families to receive the credit as monthly payments instead of only at tax time. Those monthly payments stopped in December 2022.

Several proposals to extend or restore the expanded credit have been introduced in Congress since then, but none have become law. The credit remains at the 2023 level unless Congress passes new legislation.

Key Takeaways

  • The expanded Child Tax Credit of up to $3,600 per child expired on December 31, 2022, and did not become permanent.
  • The credit is now $2,000 per child under 17, the same amount it was before the 2021 expansion.
  • Monthly advance payments of the credit ended in December 2022; families now receive the full credit only when they file their tax return.
  • Income limits determine whether you receive the full credit or a reduced amount, and these thresholds have not changed since the expansion ended.

How the expanded credit worked in 2021 and 2022

During 2021 and 2022, the credit was $3,000 per child ages 6 to 17, and $3,600 per child under 6. Families with income below $400,000 (married filing jointly) or $200,000 (single filers) received the full amount. The credit phased out by $50 for every $1,000 of income above those thresholds.

The most significant change was the monthly payment option. The IRS sent advance payments of half the credit directly to families' bank accounts or by check from July through December 2021, and again from July through December 2022. Families claimed the other half when they filed their 2021 or 2022 tax return.

This structure meant a family with one child under 6 could receive up to $150 per month in advance payments ($1,800 total), then claim the remaining $1,800 when filing their return. Families did not have to do anything to receive the monthly payments if they had filed a 2020 tax return or registered with the IRS.

The credit structure now, after 2022

The current Child Tax Credit is $2,000 per child under 17. There is no separate amount for younger children. The income phase-out thresholds remain $400,000 for married couples filing jointly and $200,000 for single filers.

Families receive the entire credit when they file their tax return for the year. There are no monthly advance payments. This is how the credit worked before 2021.

The credit is refundable up to $1,600 per child, meaning you can receive money back even if you owe no tax. The remaining $400 is nonrefundable, so it can only reduce the tax you owe.

Why the expansion ended

The American Rescue Plan was a temporary measure designed to provide relief during the COVID-19 pandemic. Congress set the expansion to expire after 2022 rather than making it permanent. This meant the credit automatically returned to its previous level on January 1, 2023, unless Congress passed new legislation to extend it.

Several bills have been introduced to restore the expanded credit or make it permanent, but none have passed both chambers of Congress and been signed into law. These proposals have come from both parties but have not gained enough support to move forward.

What changed for families between 2022 and 2023

Families with children lost the monthly payments entirely. A family that received $150 per month in 2022 no longer receives those payments in 2023 and beyond. They can only claim the $2,000 credit when they file their tax return.

The maximum credit per child dropped from $3,600 (or $3,000) to $2,000. A family with one child under 6 went from a potential $3,600 credit to $2,000. A family with two children ages 6 to 17 went from $6,000 to $4,000.

Income limits did not change, so families with the same income threshold still phase out at $400,000 (married) or $200,000 (single). However, the credit amount that phases out is now smaller.

How to claim the current Child Tax Credit

You claim the Child Tax Credit on your tax return using Form 1040 and Schedule 8812 (or Schedule 1 if you are using the simplified method). You must have a valid Social Security number for each child you claim, and the child must be under 17 at the end of the tax year.

The child must be your son, daughter, stepchild, foster child, sibling, or descendant of any of these. They must live with you for more than half the year and be a U.S. citizen, national, or resident alien.

If you are filing your return through a tax software program or with a tax preparer, they will walk you through the questions needed to calculate the credit. You do not need to file any separate forms to claim it—it is part of your regular tax return.

Frequently Asked Questions

Will the expanded Child Tax Credit come back?

Congress would need to pass new legislation to restore the expanded credit. Several proposals have been introduced, but none have become law. There is no set date or may provide that it will be extended or made permanent.

Can I still get the monthly payments?

No. Monthly advance payments ended on December 31, 2022. You can only claim the Child Tax Credit when you file your tax return now. If you received advance payments in 2022, you may have had to reconcile them on your 2022 tax return if your income changed.

What if my income was too high in 2021 or 2022 but is lower now?

The income limits for the current credit are the same as they were during the expansion: $400,000 for married couples filing jointly and $200,000 for single filers. If your income is now below those thresholds, you may be able to claim the $2,000 credit per child on your current return.

Do I have to repay the advance payments I received?

No. The advance payments you received in 2021 and 2022 do not have to be repaid. However, if your income was higher in those years than you reported when you received the payments, you may owe some of the credit back when you file your return. The IRS will calculate this when you file.

Can I claim the credit for a child who turned 17 during the year?

Yes, if the child was under 17 on December 31 of the tax year. The credit is based on the child's age at the end of the year, not at the beginning. Once a child turns 17, you cannot claim the credit for them in future years.