Are you trying to figure out how much money you’ll save in 2018 under the GOP’s new tax bill? While the bill overwhelmingly favors the rich and large corporations, it may offer some relief to lower and middle class families thanks to changes in the Child Tax Credit program.
Under the new republican tax bill, the child tax credit will be increased from $1,000 to $2,000 per child per year with up to $1,400 per child refundable.
If you’re like many people, you’re probably wondering what “up to $1,400 refundable” means, right?
Under the new tax plan, families can receive up to $1,400 per child as a tax “refund”, even if they don’t owe any income taxes at all. For example, a young family with 3 kids making less than $25,000 per year would not owe any income tax. Under the new tax plan, this family would still receive a tax credit refund of $1,400 per child ($4,200 in our example).
Families with 3 kids who do owe more than $6,000 in federal income taxes would receive the full $6,000 credit on their taxes. The child tax credit begins phasing out at $400,000 for couples filing jointly compared to $110,000 in 2017 meaning a lot more middle and so called “upper-class” families will qualify for this new tax break.
These changes to the child tax credit for 2018 and beyond may seem like a boon to lower and middle class families but critics argue child tax credits come at the expense of other popular tax deductions for the middle class including personal exemptions (gone), limited state and local income tax deductions, and limited mortgage interest deductions.
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