The State of the Child Tax Credit


Since the expanded Child Tax Credit (CTC) of the American Rescue Plan expired in 2021, the federal government has moved slowly to extend and codify an expanded version. The credit proved to be a remarkable mechanism for providing economic relief to children and the families who raise them. These regular payments helped families afford gas, food, rent, and school expenses by delivering hundreds of dollars monthly to families across the United States.1 Eleven states around the country have since instituted their own versions, inspired by the success of the national credit. When the credit expired, 5.2 million children plummeted back into poverty.2 As families are struggling with rising prices,3 an enshrined and expanded credit would meet a moment of need for households around the country. 

After months of negotiations, a bipartisan group of House and Senate lawmakers proposed The Tax Relief for American Families and Workers Act of 2024, a roughly $78 billion package. The deal will leverage corporate tax credits for a reworked CTC, a far cry from the 2021 version. The agreement gradually raises the maximum benefit a child can receive to $2,000 ($1,600 less than the 2021 version for children under 6) and allows low-income families with multiple children to claim the same benefit for each of their children. Less than desirable aspects of the current law remain intact, as the credit is still tied to work requirements and the payments are a lump sum rather than a monthly occurrence. These changes are estimated to benefit 400,000 children in the first year. By contrast, the 2021 CTC pulled nearly 3.7 million children out of poverty in a single year.4 

While the CTC is considered a bipartisan policy, lawmakers across the political spectrum have disagreed on the details ever since the expanded credit expired. Legislators continue to spar over work requirements, refundability, and intensity of payment among other issues. All the while, families are struggling to provide their children with basic necessities. The current law provides no or only partial credit to 18.7 million children under the age of 17 because their parents lack earnings or their earnings are too low.5 73% of that number are children of color, and well over half live in families headed by a single mother. And yet, children in families with the highest incomes in the country, who make as much as $400,000, receive the full credit.6 This is an untenable reality, highlighting America’s child-rearing class divide.

Congress proved it was possible to dramatically alleviate child poverty in 2021. The Child Tax Credit before us is a sliver of the support that we now know can be provided. At TEP, we believe in abundance and thus applaud efforts to improve the economic well-being of children and families while demanding more as a practice. All children deserve the resources to ensure their basic needs are met to the highest degree. Such a world is within our reach, through policies that promote the equitable distribution of public goods and enhance the lives of all children and families.

  1.  The impacts of the 2021 Expanded Child Tax Credit on family employment, nutrition, and financial well-being: ↩︎
  2. First Focus on Children: ↩︎
  3. From housing to energy to food, US inflation picks up, though some costs rise only mildly: ↩︎
  4. The impacts of the 2021 expanded child tax credit on family employment, nutrition, and financial well-being: ↩︎
  5. Next Steps On the Child Tax Credit: ↩︎
  6. Next Steps On the Child Tax Credit: ↩︎
January 19, 2024
The Expectations Project

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