President Joe Biden speaks alongside US Vice President Kamala Harris (3rd L) as he holds a meeting with US Senators including Ben Cardin (L), Democrat of Maryland, Jim Inhofe (2nd L), Republican of Oklahoma, Tom Carper (2nd R), Democrat of Delaware, and Shelley Moore Capito (R), Republican of West Virginia, on infrastructure improvements, in the Oval Office of the White House in Washington, DC, February 11, 2021.
Saul Loeb | AFP | Getty Images
House Democrats have unveiled a full set of social and climate change proposals, including a boost for millions of Americans with a permanent extension of the earned income tax credit.
The working income tax credit provides a deduction for low and moderate income families. Taxpayers must have earned income – wages and payments do not include investments – and the credit may increase for eligible families with children.
“The Earned Income Tax Credit is a proven boost for people who hold important jobs but earn low wages,” said Kris Cox, deputy director of federal tax policy at the Center on Budget and Policy Priorities .
“And there was a major flaw in that it really left out adults who don’t raise kids at home,” she said.
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The credit is a percentage of earnings, and it’s refundable, meaning it can lower a person’s tax bill or provide a refund, even if it’s more than they owe.
Previously, childless workers benefited little from the labor income tax credit. However, the American Rescue Plan increased the benefit for these people to $ 1,502 in 2021, almost triple the old write-off.
The measure also expanded eligibility by increasing the earned income limit to $ 21,430 ($ 27,380 for married couples) and widening the age ranges to include Americans as young as 19 and tax filers over. 65 years old.
There is an Internal Revenue Service tool to see who qualifies.
House Democrats want to make temporary extensions to the working income tax credit permanent, according to a 645-page bill released on Friday, effective December 31, 2021.
Before the US bailout, 5.8 million tax filers could have been taxed deeper into poverty, largely because of the lower income tax credit, according to estimates from the Center on Budget and Policy Priorities.
“The March US bailout took a bold step to correct this flaw,” Cox said, noting that 2.5 million black and Latino American workers may have been disproportionately affected.
“This correction is not only a big step forward for adults who do not raise children at home, but it also has real implications for racial equity,” she added.
A permanent expansion could cost $ 135 billion over the next decade, estimates the Joint Committee on Taxation.
If enacted, the increased credit could deliver $ 12.4 billion to families in 2022, affecting 19.5 million workers, according to research from the Institute on Taxation and Economic Policy.