Our continuously expanding collection of Child Tax Credit research shows that the historic expansion of the credit during the COVID-19 pandemic significantly reduced child poverty and improved child well-being. If permanently expanded, it has the potential to yield high returns for society over the longer term. The resources featured here provide key examples of evidence across our central areas of Child Tax Credit research: the effects of the 2021 Child Tax Credit expansion; the projected long-term benefits and costs of a permanently expanded Child Tax Credit; the poverty reduction impact of an expanded Child Tax Credit; the children excluded from the credit without an expansion; and how different elements of policy design (e.g. full refundability; adjusting benefit levels of inflation; monthly payment delivery; and more) matter in terms of effecting lasting change for children.
Tracking the Effects of the Expanded Child Tax Credit
The American Rescue Plan made three important changes to the Child Tax Credit for 2021 — increased benefit levels, particularly for young children; expanded access to children in families with the lowest incomes formerly left out; and monthly payments — that represented a historic, albeit, temporary policy transformation. Our 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.
Tracking the Effects of the Expanded Child Tax
Curran, Megan A. 2022. Research Roundup of the Expanded Child Tax Credit: One Year On. Poverty and Social Policy Report, vol. 6, no.9. Center on Poverty and Social Policy, Columbia University.
This research roundup summarizes the range of publicly available information on what we know of the effects of the expanded credit close to one year on from the last monthly Child Tax Credit payment. The weight of the evidence is clear: while in place, the expanded Child Tax Credit reached the vast majority of families; shored up family finances; helped reduce child poverty to the lowest level on record; decreased food insufficiency; increased families’ ability to meet their basic needs; and had no discernable negative effects on parental employment. Since its expiration, many families with children have seen a reversal of fortune directly attributable to the loss of the credit.
Related: Research roundup of the expanded Child Tax Credit: first six months, December 2021
Parolin, Zachary, Megan Curran, Jordan Matsudaira, Jane Waldfogel, Christopher Wimer. 2022. Estimating Monthly Poverty Rates in the United States. Journal of Policy Analysis and Management. https://doi.org/10.1002/pam.22403
We found that the first Child Tax Credit payment kept 3 million children from poverty in July 2021; 3.5 million children from poverty in August 2021; 3.4 million children from poverty in September 2021; 3.6 million children from poverty in October 2021; 3.8 million children from poverty in November 2021, and 3.7 million children from poverty in December 2021. However, the expiration of the monthly payments resulted in 3.7 million more children in poverty in January 2022. Since then, monthly poverty in 2022 remained elevated in February, saw a temporary dip in March due to the receipt of the balance of the credit at tax time, but rose back up in April and May and remained high through summer 2022.
Related: Comparing the performance of monthly poverty measures
Related: Center on Poverty and Social Policy Monthly Poverty Data Page (access data & charts)
Wimer, Christopher, Sophie Collyer, David Harris, Jiwan Lee. 2022. The 2021 Child Tax Credit Expansion: Child Poverty Reduction and the Children Formerly Left Behind. Poverty & Social Policy Brief, vol. 6, no. 8. New York: Center on Poverty and Social Policy at Columbia University.
In 2021, the expanded Child Tax Credit cut child poverty by 43 percent, driving child poverty to the lowest level on record under the Supplemental Poverty Measure. We find that children in groups historically excluded from the Child Tax Credit —here: Black and Latino children, children in single-parent families, rural families, children in larger families, and families with young children—all saw large declines in child poverty under the expanded credit, in many cases closing gaps between them and groups previously less likely to be left behind. The expanded Child Tax Credit’s supplemental bonus of $600 per young child per year also helped equalize child poverty rates between younger and older children.
Hardy, Bradley, Sophie Collyer, Christopher Wimer. 2023. The Antipoverty Effects of the Expanded Child Tax Credit Across States: Where Were the Historic Reductions Felt? The Hamilton Project.
This policy report, released by the The Hamilton Project at The Brookings Institution, investigates state variation in the effects of the 2021 expanded Child Tax Credit on child poverty. It examines differences in these effects by state-level cost of living and by differences in state-level poverty rates. Results show that while the expanded Child Tax Credit resulted in substantial reductions in poverty across the board, poverty reductions were the greatest in those states with relatively lower costs of living and with higher pre-expansion poverty rates.
Collyer, Sophie, Megan A. Curran, David Harris, Dominic Richardson, and Christopher Wimer 2022. A Step in the Right Direction: The Expanded Child Tax Credit Would Move the United States’ High Child Poverty Rate Closer to Peer Nations. Poverty & Social Policy Joint Report, vol. 6, no. 7. New York: Center on Poverty and Social Policy at Columbia University & UNICEF Innocenti–Global Office of Research and Foresight.
We estimate how the expanded Child Tax Credit would move the United States in its child poverty ranking relative to other wealthy nations. From lowest child poverty rate to highest, the US ranks 31st among 34 OECD nations. An expanded Child Tax Credit moves the United States closer to the mainstream: from 31st to 24th, lowering the US child poverty rate to a point significantly closer to that of other wealthy democracies such as Germany and France.
Parolin, Zachary, Elizabeth Ananat, Sophie Collyer, Megan A. Curran, and Christopher Wimer. 2021. The Initial Effects of the Expanded Child Tax Credit on Material Hardship. Working Paper. Cambridge, MA: National Bureau of Economic Research.
We find that the first monthly CTC payments strongly reduced food insufficiency among low-income households with children. The payments are associated with a 7.5-percentage point or, 25 percent, decline in food insufficiency among low-income families. These effects are primarily concentrated among households with annual incomes of less than $35,000.
Parolin, Zachary, Elizabeth Ananat, Sophie Collyer, Megan Curran, and Christopher Wimer. 2022. The Differential Effects of Monthly and Lump-sum Child Tax Credit Payments on Food and Housing Hardship. Center on Poverty and Social Policy Working Paper.
We investigate the effects of the monthly vs. the lump-sum expanded Child Tax Credit payments on food and housing hardship and find that families were more likely to use the monthly benefits to purchase food (and that monthly payments reduced food hardship), but the lump-sum benefits to catch up on rent payments (and that the lump-sum payment reduced housing hardship).
Ananat, Elizabeth, Benjamin Glasner, Christal Hamilton, and Zachary Parolin. 2022. Effects of the Expanded Child Tax Credit on Employment Outcomes: Evidence from Real-world Data from April to December 2021. Working Paper. Cambridge, MA: National Bureau of Economic Research.
We empirically assess how the Child Tax Credit monthly payments affected employment outcomes using real-world data from April through December 2021. Our analyses of real-world data suggest that the expanded CTC did not have negative short-term employment effects that offset its documented reductions in poverty and hardship.
National
Schild, Jake, Collyer, Sophie, Thesia Garner, Neeraj Kaushal, Jiwan Lee, Jane Waldfogel, and Christopher T. Wimer. 2023. Effects of the Expanded Child Tax Credit on Household Spending: Estimates Based on U.S. Consumer Expenditure Survey Data. NBER Working Paper 31412. Cambridge: National Bureau of Economic Research.
We use data from the Consumer Expenditure Survey from January 2019 to March 2022 to examine the impact of the expanded Child Tax Credit on household spending. This paper provides a first preliminary look at expenditures using partial data from the first two months of the payments. Families used the monthly payments to enhance the well-being of both their children and the entire household. For each $100 of imputed Child Tax Credit payment, our models show that families spent $75, mainly on food ($28), housing ($31), and child-related goods and services ($15). Low-income households, Hispanic households, and non-Hispanic Black households spent larger proportions of their payments than the average household.
Parolin, Zachary, Giulia Giupponi, Emma Lee, and Sophie Collyer. 2022. Consumption Responses to an Unconditional Child Allowance in the United States. OSF Pre-print: 10.31219/osf.io/k2mwy
We investigate the impact of the Child Tax Credit expansion on family consumption patterns using anonymized mobile-location data and debit/credit card data that track visits and spending at 1.3 million establishments across counties that cover 99.6% of the US population. Counties benefiting most from the expansion saw larger increases in child care center visits; spending at personal care establishments, restaurants, and grocery and general stores. There were no significant increases in consumption at alcohol, tobacco, or gambling establishments. Monthly Child Tax Credit payments led to greater consumption at grocery and general stores and lumpsum Child Tax Credit payments saw greater consumption at children’s and family clothing stores. Both monthly and lumpsum payments increased child care center visits. These findings indicate the expanded Child Tax Credit increased household consumption and particularly spending on children.
New York City
Lens, Vicki, Abraham Arriaga, Caterina Pisciotta, Lily Bushman-Copp, Kimona Spencer and Samantha Kronenfeld 2022. Spotlight on the Child Tax Credit: Transforming the Lives of Families. New York: Center on Poverty and Social Policy and Robin Hood.
We interviewed 18 families in New York City multiple times over six months to see how they incorporated the monthly Child Tax Credit into their budgets: most used it to cover basic needs (food, housing, and child care), while others paid down credit card debt and saved. Virtually all used it for child-related expenses or enhancements. It proved beneficial to working parents in helping with child care and made a real difference for people living on the margins as they rarely have “extra” money to spend. These gains were temporary, as parents reported increased hardship following the expiration of the monthly Child Tax Credit payments after December 2021.
Collyer, Sophie, Jill Gandhi, Irwin Garfinkel, Schuyler Rose, Jane Waldfogel, and Christopher Wimer. 2022. The Effects of the 2021 Monthly Child Tax Credit on Child and Family Well-being: Evidence from New York City. Socius, vol. 8.
We assess the effects of the monthly Child Tax Credit payments in place in 2021 using data from two longitudinal studies of well-being in New York City and find that the monthly Child Tax Credit led to significant declines in the risk for facing material hardship, multiple hardships, running out of money, and using food pantries. We do not find evidence of significant changes in parents’ mental health, employment, or spending on childcare or enrichment activities.
The Potential Long-Term Benefits of an Expanded Child Tax Credit
Our benefit-cost analysis reveals that an expanded Child Tax Credit would deliver a value to society ten times the annual costs, a rate of return of approximately $10 in benefits to society for every $1 spent. If made permanent, it would continue to generate long-term savings and benefits by improving children’s health, education, and future earnings.
Garfinkel, Irwin, Sariscsany, Laurel, Ananat, Elizabeth, Collyer, Sophie, Hartley, Robert Paul, Wang, Buyi, & Christopher Wimer. 2022. The Benefits and Costs of a Child Allowance. Journal of Benefit-Cost Analysis, 1-28.
This benefit-cost analysis examines three proposed versions of a child allowance. We find that an expanded Child Tax Credit, similar to that enacted under the 2021 American Rescue Plan, would cost $97 billion per year and generate social benefits of $929 billion per year—producing an annual rate of return nearly 10 times that of the annual cost. Sensitivity analyses indicate the results are robust and that a child allowance produces a very strong to an extraordinarily strong return for the U.S. population.
Predicting the Anti-Poverty Potential of an Expanded Child Tax Credit
The 2021 American Rescue Plan expansion of the Child Tax Credit was based largely on the parameters of the American Family Act, a proposal introduced in Congress prior to the onset of the COVID-19 pandemic. Our analyses estimated the potential anti-poverty impact of this type of expansion, finding that an expanded Child Tax Credit could cut child poverty at the national level nearly in half, while meaningfully reducing child poverty across states, racial and ethnic groups, family types, and more.
Collyer, Sophie, Megan A. Curran, Robert Paul Hartley, Zachary Parolin and Christopher Wimer. 2021. The Potential Poverty Reduction Effect of the American Rescue Plan. Poverty and Social Policy Fact Sheet. New York: Center on Poverty and Social Policy, Columbia University.
This fact sheet analyzes the potential poverty reduction effects of a set of policy elements in the American Rescue Plan. It projects annual poverty rates for 2021 for the US population as a whole and across age and racial and ethnic groups. A relief package containing enhanced Supplemental Nutrition Assistance Program (SNAP) benefits, unemployment benefits, family and child care tax credits, as well as direct cash payments could cut child poverty by more than half in 2021.
Collyer, Sophie, Megan A. Curran, Robert Paul Hartley, Zachary Parolin and Christopher Wimer. 2021. The Potential Poverty Reduction Effect of the American Families Plan. Poverty and Social Policy Fact Sheet. New York: Center on Poverty and Social Policy, Columbia University.
This fact sheet analyzes the potential poverty reduction effects of a set of policy elements in President Biden’s proposed American Families Plan. It projects annual poverty rates for 2022, finding that these policies could reduce the national poverty rate by nearly one-quarter (23%) and the child poverty rate by nearly half (47.4%), relative to the projected poverty rates for 2022 without the American Families Plan. This could sustain the progress made towards reducing U.S. poverty projected under the American Rescue Plan beyond 2021.
Center on Poverty and Social Policy. 2021. A Poverty Reduction Analysis of the American Family Act H.R. 1560, 116th Congress. Poverty & Social Policy Fact Sheet. New York: Columbia University.
This fact sheet examines the poverty reduction potential of the proposed American Family Act, the eventual basis for the 2021 American Rescue Plan expansion. It provides estimates for national reductions in poverty and deep poverty by children's age, race and ethnicity, and family characteristics, as well as state-level results. In a pre-pandemic context, an expanded Child Tax Credit under the parameters of the proposed American Family Act could see child poverty cut nearly in half (a reduction of 45%).
Related: A supplementary table estimating the anti-poverty impacts, by children’s race and ethnicity, of the American Family Act relative to the child poverty rate before and after accounting for the Child Tax Credit under current law.
Wimer, Christopher, Sophie Collyer, David Harris, and Robert Paul Hartley. 2019. The Economic Mobility Act as Antipoverty Policy: Proposed Changes to Tax Law Would Cut Child Poverty Nearly a Quarter. Poverty and Social Policy Brief, vol. 3, no. 8. New York: Center on Poverty and Social Policy, Columbia University.
Our 2019 analysis of the proposed Economic Mobility Act (H.R. 3300, 116th Congress) finds that an expanded Child Tax Credit (expanded eligibility, but no change in benefit levels) and an expanded childless Earned Income Tax Credit could cut child poverty by close to 25 percent.
Christopher Wimer and Sophie Collyer. 2017. The Bennet-Brown CTC Proposal Would Cut Child Poverty Nearly in Half. Poverty and Social Poverty Brief, vol. 1, no. 3. New York: Center on Poverty and Social Policy, Columbia University.
Our 2017 analysis of the proposed American Family Act (S. 2018, 115th Congress) finds an expanded Child Tax Credit (increased benefit levels and expanded eligibility) could cut child poverty by close to half.
Collyer, Sophie, Aidan Davis, David Harris, Megan Curran and Christopher Wimer. 2022. State Child Tax Credits and Child Poverty: A 50-State Analysis. New York and Washington DC: Columbia University Center on Poverty and Social Policy and Institute on Taxation and Economic Policy.
In a 50-state joint analysis with the Institute on Taxation and Economic Policy (ITEP), we present state Child Tax Credit options that would reduce state child poverty rates by 25 or 50 percent when coupled with the federal credit, which—after the expiration of the 2021 expansion—provides a maximum of $2,000 per child, is not fully refundable, and phases in with earnings. Heading into 2023, there is increasing momentum for state Child Tax Credits, with ten states already delivering a credit and many others considering one.
Davis, Aidan, Meg Wiehe, Sophie Collyer, David Harris, and Christopher Wimer. 2019. The Case for Extending State-Level Child Tax Credits to Those Left Out: A 50-State Analysis. Washington DC and New York: Institute for Taxation and Economic Policy and Center on Poverty and Social Policy.
In a 50-state joint analysis with the Institute on Taxation and Economic Policy (ITEP), we find that expanding state-level Child Tax Credits, to complement the federal credit, could lift millions of children out of poverty and help families who benefited little or not at all from the 2017 federal Child Tax Credit expansion. We outline two bold options for creating state-level Child Tax Credits: the first would reduce child poverty by at least 15 percent in all but four states, while the second, more ambitious, option would reduce child poverty by at least 25 percent in all states and up to 45 percent in more than half of states.
Who is Left Out? The Case for Child Tax Credit Reform
Our research shows that one out of every three children in the U.S. were left out of the full Child Tax Credit, prior to the 2021 American Rescue Plan temporary expansion, because their parents did not earn enough to qualify. Disparities were widespread: one out of every two Black and Latino children were left out of the full Child Tax Credit and disproportionately 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 left out.
Collyer, Sophie, David Harris, and Christopher Wimer. 2019. Left Behind: The One-Third of Children in Families Who Earn Too Little to Get the Full Child Tax Credit. Poverty and Social Policy Brief, vol. 3, no. 6. New York: Center on Poverty and Social Policy, Columbia University.
We provide the first look at the one-third of all children in the US who are ‘left behind’ and excluded from the full Child Tax Credit because their families do not have enough earnings to qualify. This analysis provides statistics on those disproportionately left out, including children of color, those in families with young children, those with single parents, and those who reside in rural areas.
Collyer, Sophie. 2019. Children Losing Out: The Geographic Distribution of the Federal Child Tax Credit. Poverty and Social Policy Brief, vol. 3, no. 9. New York: Center on Poverty and Social Policy, Columbia University.
We identify the proportion of children left out of the full Child Tax Credit by state and congressional district. Children in lower income/higher poverty areas are more likely to be left out. States with the highest levels of children left out include: Mississippi (47%), New Mexico (46%), Louisiana (43%), Arkansas (44%), and Alabama (43%). The Congressional districts with the highest proportion of children left out include: NY-15 (68%), MI-13 (61%), TX-34 (61%), TX-29 (60%), CA-16 (59%), NY-13 (58%), MS-2 (58%), AZ-7 (58%), TX-28 (57%), and CA-40 (57%).
Curran, Megan A. and Sophie Collyer. 2020. Children Left Behind in Larger Families: The Uneven Receipt of the Federal Child Tax Credit by Children’s Family Size. Poverty and Social Policy Brief, vol. 4, no. 4. New York: Center on Poverty and Social Policy, Columbia University.
We reveal how the structure of the Child Tax Credit, prior to the 2021 temporary expansion, meant that families must earn more money with each additional child in order to maintain access to the full Child Tax Credit. In 2019, for example, a two-adult, two-child family had to earn at least $36,000 to access the full credit for their family, but a two-adult, three-child family had to earn at least $42,000 in order to receive the full credit. This brief also provides a state-by-state list of where children in larger families are left out of the full Child Tax Credit at the greatest rates.
Policy Design Matters: Considerations for Future Reform
We demonstrate how policy design principles are key to achieving inclusive anti-poverty reduction with an expanded Child Tax Credit. Our analyses identify how certain elements – including, but not limited to: full refundability, monthly payment delivery, indexing the credit to inflation, and more—are key to both short-term and long-term progress.
Collyer, Sophie, Christopher Wimer, and David Harris. 2022. Keeping Up with Inflation: How Policy Indexation Can Enhance Poverty Reduction. New York: Center on Poverty and Social Policy and The Century Foundation.
We examine the anti-poverty potential of the expanded Child Tax Credit under different scenarios to shine a spotlight on the importance of inflation indexation for optimizing the anti-poverty effects of policy. We find that: anti-poverty policies that have higher benefit levels achieve a greater degree of poverty reduction; anti-poverty policy benefits that are not indexed to inflation will have their dollar value erode over time; a Child Tax Credit not indexed to inflation would lose about a quarter of its value over ten years; and policymakers should include inflation indexation in all anti-poverty program benefits to ensure their effectiveness.