US Vice President Kamala Harris speaks at an event with US President Joe Biden (not pictured) in Prince Georgeâs County, Maryland, US, August 15, 2024.
Elizabeth Frantz Reuters
Vice President Kamala Harris on Friday announced her economic plan, including an expanded child tax credit of up to $6,000 in total tax relief for families with babies.
The Democratic presidential candidateâs plan aims to restore the higher child tax credit implemented through the Saving America Plan in 2021, which provides a maximum credit of up to $3,600 per child, according to a fact sheet from the campaign.
The 2021 credit is up to $3,000 or $3,600, depending on the childâs age and family income. Harrisâ proposed tax break would increase for middle-income families up to a year after birth.
âWe will provide $6,000 in tax relief for families during the first year of their childâs life,â said Harris during a policy speech in Raleigh, North Carolina.
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The plan comes less than a week after Sen. JD Vance of Ohio, former President Donald Trumpâs GOP mate, floated a $5,000 child tax credit.
A Trump campaign official told CNBC: âTrump will consider a significant expansion of the child tax credit that applies to American families.â
While Harris is following in President Joe Bidenâs footsteps with his proposed expansion of the child tax credit, the $2,400 bonus for a new baby is âdifferent and a bit surprising,â said Kyle Pomerleau, a senior fellow and federal tax expert with the American Enterprise Institute. âThis, to me, is like a response to JD Vance.â
Harrisâ campaign did not immediately respond to CNBCâs request for comment.
âBipartisan momentumâ for child tax credit
Senate Republicans earlier in August blocked the expanded child tax credit that passed in the House with broad support. However, Republican lawmakers are expected to revisit the measure after the election.
âThere is bipartisan momentum behind expanding (the child tax credit),â said Andrew Lautz, associate director for the Bipartisan Policy Centerâs economic policy program.
There is bipartisan momentum behind expanding (child tax credit).
Andrew Lautz
Associate director for the Bipartisan Policy Centerâs economic policy program
The size of the expansion and the design of future credit will depend on the party that controls the White House and Congress. But the House-passed bill and Senate talks could be a starting point, Lautz said.
Future child tax credit expiration
Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 when Trumpâs 2017 tax cuts expire after 2025.
The American Rescue Plan increased the maximum child tax credit from $2,000 to $3,000 or $3,600, depending on the childâs age. Families receive up to half through monthly payments for 2021.
The child poverty rate will drop to 5.2% by 2021, largely due to credit expansion, according to a Columbia University analysis.
If there is an expansion of the child tax credit in the future, Pomerleau doesnât expect it to be as large as those proposed by Harris or Vance.
Amid the federal budget deficit, lawmakers have been grappling with trillions in tax cuts that are âvery expensive,â he said.
Expanding the child tax credit to $3,000 or $3,600 could cost an estimated $1.1 trillion over a decade, according to the Committee for a Responsible Federal Budget. Meanwhile, the expansion to $6,000 for a new baby could cost $100 billion.
Harrisâs campaign economic plan fact sheet said he would carry out his âcommitment to fiscal responsibility,â including a call for higher taxes on wealthy Americans and big corporations.