The Working Families Tax Relief Act of 2023 makes significant changes to two major tax credits that help lower-income families: the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC).

For the Earned Income Tax Credit, the bill lowers the age requirement from 25 to 19 for most people, allowing younger workers to claim the credit. It also creates special exceptions for students (who can be up to 24), former foster youth (who can be 18), and homeless youth (who can be 18). The bill also doubles the credit amount from 7.65% to 15.3% of earnings, and increases the income limits that determine eligibility. Additionally, if your income drops from one year to the next, you can choose to calculate your credit based on your previous year's higher income instead, which could give you a bigger refund.

For the Child Tax Credit, the bill makes it monthly instead of annual, giving families $250 per month per child (or $300 for children under 6). This means families can receive payments throughout the year rather than waiting until tax time. The credit starts to reduce for higher-income families—beginning at $150,000 for married couples filing jointly and $112,500 for single filers. The bill also updates these amounts annually for inflation starting in 2025. Finally, the law clarifies who qualifies as a dependent child and includes new rules about how to handle situations where multiple family members might claim the same child.

These changes take effect for tax years beginning after December 31, 2023, and are designed to provide more immediate financial support to working families with children.

Working Families Tax Relief Act of 2023

Brown, Sherrod

Working Families Tax Relief Act of 2023 This bill expands the earned income tax credit and makes the child tax credit fully refundable. The bill increases and makes permanent the earned income tax credit for taxpayers with no qualifying children and expands age limits for credit eligibility (currently, taxpayers must be at least 25 years of age and not older than 65). It lowers the age baseline of 25 years to 19 years and eliminates the 65 age limit). The bill increases the child tax credit amount and provides for monthly advance payments of such credit.