Child Tax Credit

The American Rescue Plan made three important changes to the Child Tax Credit for 2021—higher benefit levels, particularly for young children; expanded access to children in families with the lowest incomes historically left out; and monthly payment delivery—that represented a historic, albeit, temporary policy transformation. This research tracks the effects of this expansion across a range of indicators, including: child poverty; food, financial, and material hardship; family income and expenditures; employment; and more.

From its inception, the Child Tax Credit has excluded a substantial proportion of children from the full credit because their families do not earn enough to qualify. The share of children affected has changed over time, but prior to the pandemic, 1 out of every 3 children nationwide were left out. Disparities were widespread: 1 out of every 2 Black and Latino children were left out and high proportions of children in single parent households, young children, children in larger families, children in rural areas, and children in higher poverty areas were also excluded. This research identifies patterns and changes among the population of children left out of the full Child Tax Credit through historic and recent policy changes.

This research estimates the potential anti-poverty impacts of proposed and enacted changes to the Child Tax Credit, with a particular focus on child poverty rates nationally and by state, across racial and ethnic groups, family types, and more. 

Our benefit-cost research reveals that a permanently expanded Child Tax Credit would generate a high rate of return in benefits to society for every $1 spent on the credit, delivering an annual social and economic value to society through improvements in children's health, education, and future earnings many times greater than the annual cost. 

Policy design choices affects the anti-poverty poverty potential of the Child Tax Credit. This research identifies how different policy design elements—including, but not limited to: full refundability, monthly payment delivery, indexing the credit to inflation, and more—impact short-term and long-term policy outcomes.