Correcting the Record: Tax Relief for American Families and Workers Act Incentivizes Work, Maintains Trump Tax Cuts Work Requirements
Economists agree: Child Tax Credit modernizations encourage more Americans to work.
WASHINGTON, D.C. – Multiple studies, including analysis from the Joint Committee on Taxation (JCT), confirm that the work incentives in the Tax Relief for American Families and Workers Act will encourage more Americans to join and stay in the workforce. Just like the 2017 Trump tax cuts, the tax relief package, that passed the House of Representatives and awaits action in the Senate, requires taxpayers to earn at least $2,500 to qualify for the credit. Once a taxpayer meets that minimum threshold, the credit phases in consistent with the Trump tax reforms.
The Tax Relief for American Families and Workers Act keeps the Child Tax Credit structure in line with the increased Trump-era credit and rejects any of the so-called “American Rescue Plan” elements, which eliminated work requirements and turned the credit into a monthly welfare benefit. This legislation denies attempts to turn the Child Tax Credit into an unconditional cash benefit by keeping work requirements in place, ending monthly checks, and retaining the Republican tax reforms level for refundability.
Ways and Means Committee Chairman Jason Smith (MO-08) released the following statement alongside a fact sheet explaining the pro-family, pro-work provisions in the Tax Relief for American Families and Workers Act:
“The Child Tax Credit in this bill is pro-family, pro-work, and builds on the success of the 2017 Trump tax cuts that produced the lowest unemployment and lowest poverty rates in half a century. Republicans successfully fought to restore important work requirements that were abandoned in the so-called American Rescue Plan. The Child Tax Credit provisions in this bill help families crushed by inflation, remove the penalty for families with multiple children, and maintain work requirements.”
Economists Agree: Child Tax Credit Updates Incentivize Work
Studies from multiple respected economists have found that the Child Tax Credit provisions of the Tax Relief for American Families and Workers Act would actually encourage more parents to work.
Large and Growing Families Are Biggest Winners
- The Tax Relief for American Families and Workers Act eliminates the existing penalty on large families, giving them relief after three years and counting of skyrocketing prices.
- Lifting the large family cap accounts for over half the cost of the Child Tax Credit in the bill. By comparison, the one-year lookback provision represents less than five percent of the cost of Child Tax Credit changes, according to the Joint Committee on Taxation.
FACT SHEET: Correcting the Record: Work Incentives and the Child Tax Credit