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Child Tax Credit

Momentum For New And Expanded Child And Earned Income Tax Credits

2023 legislative sessions saw strong momentum toward creating and expanding child tax credits. Three states created a new permanent child tax credit, one created a one-time child tax credit payment, and seven states improved existing child tax credits. These efforts build on the success of the federal Child Tax Credit in reducing child poverty and improving outcomes for children in the near and long term. Many states this year have also improved their earned income tax credits (EITCs). State EITCs, like the federal EITC, boost incomes for people paid low wages and provide greater support for people caring for children, helping them better make ends meet and thrive in the long run, research has found.

Policymakers Should Expand Child Tax Credit In Year-End Legislation

The Child Tax Credit expansion drove child poverty sharply downward in 2021. Combined with other relief efforts, the expansion helped lower child poverty by more than 40 percent between 2020 and 2021, reaching a record low of 5.2 percent, Census Bureau data released last week show. The credit’s expansion expired at the end of last year, but policymakers can renew this successful poverty-fighting policy in year-end bipartisan tax legislation. There is pressure on Congress from business interests to delay a corporate tax increase; Congress should not consider any business tax breaks without also expanding the Child Tax Credit. The new Census data are the clearest evidence to date of the expanded Child Tax Credit’s success.

Forcing People To Work So They Can Get A Child Tax Credit Is A Terrible Idea

Last year, Anna James, a mother from Fayetteville, NC received a lifeline: monthly payments from the expanded Child Tax Credit (CTC). The program provided critical financial support as she cared for her two little boys who suffered from a rare and often fatal genetic disease. Between the hospital visits, doctor’s appointments, and care at home, Anna didn’t have time for paid work, and expanded CTC payments were all she had keeping her afloat. But this support didn’t last. The monthly expanded CTC payments ended in December 2021 after Congress failed to renew the benefit and it reverted to its pre-2021 status: a non-refundable, one-time tax credit. Non-refundable tax credits include a de facto “work requirement,” as they can only be claimed by someone with earned income, meaning Anna was no longer eligible to receive support.

How Targeting Programs To Poor People Leaves Out Poor People

Less than one year ago, the United States government enacted one of the most effective anti-poverty programs in modern history. The Child Tax Credit (CTC), originally established in 1997, was expanded through the American Rescue Plan to provide families with children substantially larger payments, delivered monthly, while making low-income families eligible for the full benefits. This expansion changed the face of child poverty in the United States, lifting over 4 million children above the poverty line—a decrease in poverty of more than 40% — and decreasing food insufficiency for families with children by an estimated 26%. Unfortunately, despite its transformative impact, the expansion of the CTC is now at risk of being lost.
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