This bill, the American Family Act, creates a new refundable child tax credit that is paid monthly in advance and a separate credit for certain other dependents. It replaces the current annual child tax credit for tax years after 2024 and sets rules for who qualifies, how much is paid each month, and how monthly payments are administered.
The monthly child tax credit amounts in the bill are: $300 per month for each qualifying child who will have attained age 6 by the end of the month; 120 percent of $300 (per the bill) for each qualifying child under age 6; and a special 800 percent rule for a child who has not attained age 1 month (as written in the bill). The bill allows annual inflation adjustments to the $300 amount.
The bill creates income limits. The credit is reduced when a filer’s modified adjusted gross income exceeds an initial threshold ($150,000 joint; $75,000 married filing separately; $112,500 other) and is further limited above a higher secondary threshold ($400,000 joint; $200,000 married filing separately; $300,000 other). The bill defines who counts as a qualifying child, tie-breaker rules when more than one person claims the same child, identification rules requiring taxpayer and child taxpayer identification numbers, and rules for temporary absences, divorced parents, and presumptive eligibility.
The bill sets up monthly advance payments (Section 7527A) based on a reference month and taxable year, including an online portal for taxpayers to begin or stop payments and to provide necessary information. It includes procedures for automatic eligibility at a child’s birth, annual renewals, adjudication of competing claims, grace periods and hardship rules for retroactive payments, and protections for payments from most garnishment or offsets. The Secretary of the Treasury is directed to issue regulations and coordinate with U.S. possessions (Puerto Rico, mirror code possessions, American Samoa) about payments and related reimbursements.
The bill also establishes a $500 credit for certain other dependents, with a phaseout beginning at the stated modified adjusted gross income thresholds ($400,000 joint; $200,000 married filing separately; $300,000 other). It includes rules to reconcile monthly advance payments with the final credit on the tax return: advance payments reduce the final credit, and in certain cases excess advance payments can increase tax owed (for example, fraud or changes in income or filing status). The bill sets disallowance periods for fraudulent or reckless improper claims and requires the Secretary to issue implementing regulations.
If you are eligible, the bill would let you receive part of the child tax credit as a monthly payment instead of getting it only when you file your tax return. You must supply required identification numbers and other information to get advance monthly payments. The bill also creates a separate, one-time annual credit for other dependents.
Monthly payments may begin automatically in some cases (for example, a new birth or when information already exists) and can be stopped or started through an online portal. If you receive monthly advance payments, those payments will be subtracted from the final credit on your tax return; in some cases, excess advance payments could increase your tax bill.
Protections in the bill limit garnishment and some offsets of these monthly payments and set rules for resolving multiple claims for the same child.
No publicly available information on the total cost or budgetary estimate is included in the bill text provided. The bill directs monthly refundable payments to eligible taxpayers and authorizes payments to U.S. possessions to cover those benefits; it also includes provisions for small increases to administrative payments for some possessions. The bill text does not provide a full numeric cost estimate.
The bill text establishes a refundable child tax credit with monthly advance payments and a separate credit for other dependents. The list of sponsors on the bill indicates which members of the House introduced and support it. The bill describes administrative and eligibility rules intended to make monthly payments available, to protect against improper payments, and to coordinate payments with U.S. possessions.
No publicly available information.