News

Year-End Tax Policy Priority: Expand the Child Tax Credit for the 19 Million Children Who Receive Less Than the Full Credit

(CENTER ON BUDGET AND POLICIES PRIORITIES) CHUCK MARRKRIS COXSARAH CALAMESTEPHANIE HINGTGENGEORGE FENTON AND ARLOC SHERMAN, December 18, 2022

| BY 

The American Rescue Plan’s expansion of the Child Tax Credit, which made the full credit available to children in families with the lowest incomes for the first time, succeeded in driving child poverty sharply downward in 2021, recent Census data showed. But that expansion has expired, once again leaving an estimated 19 million children in the lowest-income families — or more than 1 in 4 children under age 17 — ineligible for the full Child Tax Credit.

The Rescue Plan’s temporary expansion of the credit — which made the full credit available to all children except those with the highest incomes, increased the maximum credit amount, and included 17-year-olds — produced historic results. The expanded credit in combination with other relief efforts drove the child poverty rate to a record low of 5.2 percent. Without the Child Tax Credit expansion (but with other pandemic relief measures in place), the child poverty rate would have been 8.1 percent.The success of the 2021 expansion showed us that high child poverty rates are a policy choice, not an inevitability.

The success of the 2021 expansion showed us that high child poverty rates are a policy choice, not an inevitability. In the congressional lame duck session, policymakers will have the opportunity once again to expand the Child Tax Credit, so that more families get help they need to afford the basics. Indeed, Congress will likely consider tax legislation during this time, as business interests are pressing for corporate tax breaks that would undo some of the modest business tax increases that were enacted as part of the 2017 tax cuts, which gave extremely large net tax cuts to corporations. Expanding the Child Tax Credit is more important than undoing a few provisions of the 2017 tax law that were used to offset some of the massive corporate tax cuts. At a minimum, policymakers should not enact any year-end corporate tax breaks without expanding the Child Tax Credit.

Source: Center on Budget and Policies Priorities