Evidence from the 2021 American Rescue Plan Act
Young adults ages 18 to 24 in the United States face some of the highest poverty rates of any age group: 1 in 5 lives in poverty, and over half have incomes below 200% of the poverty threshold (approximately $32,000 for a one-person household in 2024). High living costs and increasing difficulty securing stable full-time employment further complicate the transition from childhood to financial independence. Yet major tax and cash transfer programs, including the Earned Income Tax Credit (EITC), have historically excluded childless young adults.
In March 2021, the American Rescue Plan Act (ARPA) temporarily expanded the childless EITC for one year by. Leveraging this temporary change, we examine whether extending the EITC to young adults—a group with high rates of economic hardship and historically excluded from most government transfers—reduced material hardship. We examine three forms of hardship: not having enough food to eat (food insufficiency), falling behind on rent or mortgage payments, and difficulty covering routine household expenses such as utilities, car payments, and medical bills.
Key Findings
- The expansion reduced the likelihood that young adults were behind on their rent or mortgage payments by 29%, or about 55,000 young adults nationwide during tax season of 2022.
- Rates of overdue housing payments rose again after the expansion expired.
- The EITC also may have improved young adults’ ability to pay for routine expenses and to have enough food to eat.
The EITC is a refundable tax credit for low- and moderate-income workers that lifts about 4.4 million people above the poverty line each year. However, the EITC for workers without children —the so-called "childless EITC" —has historically been very limited. Before 2021, the maximum credit was only $538 and was restricted to workers ages 25–64 with earned income below $15,820. In March 2021, the American Rescue Plan Act (ARPA) temporarily expanded the childless EITC for one year by:
- Nearly tripling the maximum credit from $538 to $1,502
- Lowering the minimum age of eligibility from 25 to 196 for non-student tax filers
- Raising the income eligibility limit from $15,820 to $21,430 ($27,380 for joint filers)
The expanded EITC was delivered as a lump-sum payment through tax refunds when workers filed their 2021 returns in early 2022. However, the expansion applied only to tax year 2021, and the credit reverted to its pre-ARPA parameters in 2022, once again excluding workers under age 25.
Note: This is a collaboration between Poverty Solutions at the University of Michigan and the Center on Poverty and Social Policy at Columbia University.
Suggested Citation:
Lee, Jiwan, Katherine Michelmore, Natasha Pilkauskas, and Christopher Wimer. 2026. Expanding the Earned Income Tax Credit for childless young adults improves housing security. Ann Arbor and New York: University of Michigan Poverty Solutions and the Columbia University Center on Poverty and Social Policy.
Published on October 15, 2026