American Rescue Plan could make 2021 tax bill $0 for those making less than $75K
WASHINGTON - President Joe Biden’s massive $1.9 trillion relief package which was signed into law in March slashed taxes for lower-income Americans.
According to a recent report from Congress’ Joint Committee on Taxation, Americans who make between $75,000 and $100,000 a year will pay an average tax rate of just 1.8%. Taxpayers who earn less than $75,000 annually will pay no taxes, on average, in 2021.
The broadly nonexistent federal tax bill for those making less than $75,000 is thanks to a variety of provisions in the American Rescue Plan, including a historic Child Tax Credit as well as federal stimulus payments.
It’s a stark contrast from the 2.4% average tax rate that many who earned between $50,000 and $75,000 had to pay in 2018.
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During a visit to a local community college in Virginia on Monday, Biden reiterated his pledge that Americans earning less than $400,000 would not pay "a single penny" in additional taxes.
"The reason I’m bothering to do this is I keep hearing in the press ‘Biden’s going to raise your taxes,'" the president said.
Biden has touted that his historic bill, which temporarily raises the child tax credit, will permanently change the way the country deals with child poverty.
The American Rescue Plan temporarily raises the child tax credit, now at a maximum of $2,000, to as much as $3,600 per child annually. The plan also expands the credit so it’s fully available to the poorest families.
According to the Joint Committee on Taxation of Congress, roughly 48 million households are expected to claim the child tax credit for 2020.
Families are eligible for up to $3,600 annually for each child under age 6 and as much as $3,000 for children up to age 17.
While the tax breaks and other legislation will cost trillions, Biden aims to cut income inequality by attacking corporate America’s tax-avoidance schemes.
At one time — the early-to-mid-1950s — corporations accounted for 30% of federal tax collections. Last year, their share barely topped 7%.
This story was reported from Los Angeles.