Articles in this guide describe key features of legislation passed by the House to advance President Biden’s Build Back Better agenda and overhaul social and climate policy in the United States. The bill now moves to the Senate.

Much of the Biden administration’s economic agenda revolves around an overhaul of the society safety net. Core to those proposals is an expansion of the child tax credit, which White House officials say is key to slashing child poverty in the United States.

  • The bottom line: $200 billion will go toward expanding the child tax credit and the earned income tax credit, two major antipoverty initiatives.
  • What critics say: Sen. Joe Manchin had previously rocked deliberations when he suggested he wouldn’t support extending the payments without significant changes, saying at one point that “there’s no work requirement whatsoever.” The fear is the legislation hands out money to families, discouraging parents from seeking employment.
  • Senate prognosis: It’s unclear where Manchin III (D-W.Va.) will come down on the final proposal.

An extension of the child tax credit: Under the American Rescue Plan, the child tax credit was expanded for the 2021 tax year to a total of $3,600 for children 5 and younger, and $3,000 for those ages 6 through 17. As the payments hit bank accounts in July, the benefit reached an estimated 60 million children in 39 million households across the country. Researchers from Columbia University determined the first round lifted 3 million children out of poverty. If all eligible children had access to the payments, child poverty would be reduced by 40 percent, the researchers found.

The legislation extends the enhanced benefit for another year through 2022. Heads of households earning up to $112,500, and joint filers making up to $150,000 annually, would qualify for the enhanced payments. Those families would get funds in monthly installments. Households with higher incomes would need to claim the credit on their tax return the next year.

Biden himself has said the benefit would be one of his administration’s proudest achievements and has urged Congress to keep the program in place to help give working-class families extra help. The White House sought to extend the widened benefit through 2025.

But that vision was compromised in political debate over the reconciliation package. For starters, lawmakers had to weigh whether to eliminate entire policy proposals or settle for smaller versions of the tax credit over a shorter time frame. Part of the deliberations included whether to extend the credit for one year and leave Democrats with an option to add to it again later on. But some economists and lawmakers fear that if Republicans win the midterms in 2022, that would doom future extensions of the child tax credit.

Manchin also roiled negotiations when he suggested he would not support extending the monthly payments to families with children without major changes, noting “there’s no work requirement whatsoever.” Biden does not support a work requirement, and Manchin’s critics say work requirements implicitly penalize vulnerable children based on whether their parents are in the labor force.

An extension of the earned income tax credit: The American Rescue Plan expanded the earned income tax credit for low- and moderate-income families. The March law increased the write-off for workers without children by nearly three times the former amount. It also raised the income limit to $21,430 for individuals and $27,380 for married couples so that more childless workers would be eligible. The Democrats’ latest spending package would extend that broader benefit through 2022. The White House claims some 17 million low-wage employees would stand to benefit.