What Biden's new plan does for direct payments to Americans via tax credits – and what it doesn't

0
46

President Joe Biden.

Biden plans to expand the child tax credit for four more years and make the Earned Income Tax Credit permanent. He also wants to permanently lower premiums within the Affordable Care Act. The child tax credit expansion falls short of Democrats’ calls to make it permanent. See more stories on Insider’s business page.

Cornerstones of President Joe Biden’s American Families Plan are helping middle-class families and reshaping the economy. One way he aims to do that is through the expansion of health care and child tax credits.

Ahead of Biden’s $1.8 trillion infrastructure plan unveiling on Wednesday, the White House released a fact sheet detailing its key features, including universal pre-K, a national paid family and medical leave program, and free community college. It also includes several tax measures such as an expanded child tax credit and Affordable Care Act (ACA) premium tax credits, seeking to ensure low-income workers and children aren’t “taxed into poverty.”

“Direct assistance to families in the form of tax credits paid on a regular basis lifts children and families out of poverty, makes it easier for families to make ends meet, and boosts the academic and economic performance of children over time,” the fact sheet said. “But if Congress does not act, millions of American families and workers will see their taxes go up at the end of the year.”

According to the fact sheet, the tax measures in Biden’s plan include:

Making the American Rescue Plan’s ACA premium reductions – two years of lower premiums for those who buy health insurance on their own – permanent, which would be a $200 billion investment and help 9 million people save hundreds of dollars annually;Extending the child tax credit expansion by 4 years to 2025 and making the credit fully refundable;Permanently expanding the Child and Dependent Care Tax Credit (CDCTC), which would give families making less than $125,000 a year a 50% reimbursement on child care costs;And making the Earned Income Tax Credit for childless