A new Democratic proposal in Congress would raise the Earned Income Tax Credit (EITC) for young children to as much as $5,500 per child and open the benefit to more working parents by increasing the income limit to nearly $100,000 a year.
On Wednesday, Representative Kristen McDonald Rivet of Michigan unveiled the "Working Parents Tax Relief Act," a bill she plans to introduce that would significantly expand the EITC for families with very young children.
The measure would give eligible workers an extra credit of up to $5,500 for each child under age four, for up to three children. Parents would still need earned income and to qualify for the underlying EITC, which is aimed at low‑ and moderate‑income workers, according to CNBC.
Helping Middle-Income Parents
Under the proposal, the maximum income to qualify for the enhanced credit would rise to close to $100,000 for filers with young children, a level that could pull more middle‑income parents into the program.
The plan would also require the Treasury Department to set up a monthly payment system, allowing families to receive the extra help during the year rather than waiting for a lump sum at tax time. Supporters say predictable monthly payments could help parents keep up with rent, childcare fees, and grocery bills as prices remain high.
Read more: Nebraska Bill Aims To Give Parents More Flexibility in Using Children's College Savings Plan Funds
McDonald Rivet said the goal is to ease the financial strain of raising toddlers at a time when many parents report that their paychecks are not keeping up with housing and childcare costs.
She argued that reducing tax burdens for working families will return "thousands of hard‑earned dollars" to households and help them stay in the workforce. Advocacy groups that focus on poverty and family policy have welcomed the proposal as a targeted way to support parents who are working but still struggling to cover basic expenses.
The current federal EITC already provides a major income boost to many low‑ and moderate‑income families, with the average credit for the 2024 tax year reaching about $2,894, according to the Internal Revenue Service, the Tax Policy Center reported.
Research has shown that past expansions of credits for families with children, including temporary increases under the 2021 American Rescue Plan, helped reduce child poverty and raise after‑tax incomes for millions of households.
Policy experts say the new plan would build on that record by focusing extra aid on families with the youngest children, who often face the highest childcare costs.
The bill will need to advance through the House and Senate before it can become law, and its final cost, funding source, and chances in a closely divided Congress are not yet clear. However, the push reflects a broader debate in Washington over how to support working parents and use the tax code to encourage labor force participation, as per Brookings.
