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For Sasha Foster, a mother of two in Connecticut, the federal expanded Child Tax Credit (CTC) was particularly welcome last year. Foster was pregnant in 2020, “so to be able to have a little relief the following year helped,” she says—especially because she wasn’t working full time after her daughter was born. She and her husband could worry less about paying for “the normal necessities of living,” such as laundry detergent and gasoline. This summer, Foster’s son, who is about to enter the first grade, is looking forward to camp.
The American Rescue Plan Act, passed in 2021, made changes to the CTC that allowed most families across the country to receive a tax credit of up to $3,600 per child. The credit was fully refundable, meaning that families would benefit even if they didn’t owe any taxes. It was also available to low-income parents and guardians regardless of income level—there was no minimum income threshold before benefits kicked in. For most, half of the benefit was delivered in advance over the six months from July to December 2021, and the rest was provided as a lump sum during tax season this past spring.
For a brief period, the expanded CTC reached the parents and guardians of more than sixty-one million children and reduced monthly childhood poverty by nearly a third. Then it ended, and Build Back Better—President Joe Biden’s plan to boost the economy that included an extension of the credit—never passed. Without the expansion, the credit reverts to $2,000 per child, with only up to $1,500 refundable, and with an earnings requirement of approximately $12,500 to receive the full refundable credit. After 2025, the credit falls to $1,000.
Though the child tax credit is a tax credit—meaning it delivers benefits to families through the tax system—it still cannot escape being painted as a handout. Why else is it hidden away in the IRS if not to avoid being disparaged as “welfare”? Yet despite this carefulness on the part of policymakers, that happens anyway.
Childhood poverty increased nationwide by 41 percent after the federal child tax credit expansion expired.
Republican Senator Marco Rubio of Florida alleged in a statement that the credit “scraps incentives for marriage, destroys the child-support enforcement system, and abandons requirements for work.” According to HuffPost, Democratic Senator Joe Manchin of West Virginia was worried that parents would use the benefits to buy drugs. Their concerns echo the age-old, racist complaints that lazy people collect a government check instead of working.
Yet, in the absence of a federal CTC expansion, some states have passed their own child tax credits, bypassing anti-welfare rhetoric to deliver much-needed cash to low- and middle-income families.
Connecticut is one of those states, having passed a one-time child tax rebate this spring, so Foster and her family will be getting another income boost. Perhaps, she says, it will go toward gasoline to drive her son to summer camp.
“The federal [CTC] expansion put this issue on the map,” says Aidan Davis, state policy director at the Institute on Taxation and Economic Policy, a national tax and budget research organization. “It gave states an opportunity to see what a policy like that could do, and the impact it could have on people’s lives.”
Before the expanded CTC was established in 2021, five states allowed parents or guardians a credit on their state taxes for their dependent children. Since then, six more states have passed legislation to create state child tax credits, and a handful of others have proposed their own.
All in all, a state-level child tax credit is, or will become, available to at least some parents and guardians in California, Colorado, Idaho, New Jersey, New Mexico, New York, Maine, Maryland, Massachusetts, Oklahoma, and Vermont. Additionally, Rhode Island passed a one-time child tax credit, and Connecticut adopted a one-time child tax rebate.
Because these are state programs—funded by budgets that need to be balanced—state credits tend to be much smaller than the federal credit, and certainly smaller than last year’s federal CTC expansion. Credits also vary by state in terms of structure; for instance, some are targeted to young children under a certain age, since young children benefit the most, developmentally, from cash-assistance programs like the CTC. By putting more cash into families’ pockets, state CTCs can mimic what the federal expansion did—curb child poverty by providing families with the cash they need to make ends meet.
The federal expanded credit “provided really targeted relief to those families that needed it most,” says Amber Wallin, executive director of the advocacy group New Mexico Voices for Children. She adds that beyond simple relief, the income support “create[d] long-term opportunities [for children] to thrive,” as research consistently shows cash-assistance programs for families support children’s health, educational outcomes, and general well-being. This is particularly true for children of color, as they are more likely to live in poverty.
In a time of twin economic and health crises, most families spent the benefits on basic necessities like food, utilities, and clothing. In New Mexico, about 43 percent of households reported using their federal CTC to pay down debt. That increased economic security seemed to be close to disappearing with last fall’s breakdown of discussions to pass the Build Back Better Act in the Senate, and thus a CTC extension. New Mexico Voices for Children began working with the state to figure out how to fill the gap. “It became clear the feds weren’t going to step up,” says Wallin. “New Mexico had to step up.”
After all, childhood poverty increased nationwide by 41 percent after the federal expansion expired. According to a U.S. , without the credit, more than a third of households with children said they had trouble covering their typical household expenses.
New Mexico’s credit is small compared to the federal expansion—it will deliver up to $175 per child, depending on household income—but it will go to every single child in the state. That’s significant for New Mexico, as the state’s children experience some of the highest rates of poverty in the United States—nearly a quarter of children in New Mexico live in households with income below the poverty line.
Most state child tax credits are not universal like New Mexico’s, with states instituting income caps as well as earnings requirements. These changes limit who can receive the credits, though they may make it easier for CTC bills to pass state legislatures with bipartisan support. In Maryland, for example, parents or guardians can receive $500 per qualifying child, but only if the child has a disability and if the family’s annual income is under $6,000.
In Vermont, Democratic state Representative Janet Ancel sponsored legislation to create a permanent child tax credit for households with children under the age of six, which was signed into law in May. At $1,000, the Vermont CTC is one of the largest in the United States, though it’s reserved for children under the age of six and for families who make less than $125,000. “It really does function like a [child] allowance,” says Ancel, as the entire $1,000 is fully refundable and there is no minimum earnings requirement.
Ancel believes the new state CTC “make[s] clear what our priorities are and where we want to make our investments; that is, families and children.”
In Connecticut, after attempts to pass a permanent credit stalled, a one-time child tax rebate of $250 per child moved forward, starting this year. Sana Shah, chief of staff at Connecticut Voices for Children, explains that her organization has worked for three years to establish a child tax credit in Connecticut. While the rebate is temporary, she notes that it’s progressive, because there is no earnings requirement, and since it’s a rebate, it’s fully refundable. “It’s pretty similar to the [federal expansion], it’s just families are receiving less,” Shah says. “This is a good start.”
Some conservatives are not entirely opposed to a child tax credit. Senator Mitt Romney, Republican of Utah, has proposed a child tax credit that would provide up to $350 per month. The key difference between Romney’s plan and last year’s expansion is that the Senator’s bill includes an earnings requirement: The maximum benefit is available only to children whose households earn at least $10,000 per year, and the poorest children get nothing. This requirement, according to Romney’s proposal, “encourages work.” It is also structured to incentivize marriage, as two income streams are more likely to reach $10,000 than one.
Some “pro-family” conservatives might support a strong child tax credit as long as it excludes the poorest people; in this way, the policy may increase the sinking birth rate—but only among those who make a certain income. This thinking was the basis of a longtime child tax credit proposal by Senators Rubio and Mike Lee, Republican of Utah, that was inspired by a plan by conservative economist Robert Stein. In 2015, Stein bluntly told The Week that his version of the credit was “not designed to encourage fertility in the poor over and above what we already do.”
Additionally, the co-sponsor of Romney’s bill, Senator Steve Daines, Republican of Montana, leads the Senate Pro-Life Caucus. Embracing a child tax credit, especially one with a work requirement, could shore up support for Republicans after the demise of Roe v. Wade and its abortion protections in late June. Indeed, Rubio and Lee waited until the day the Supreme Court overturned Roe to unveil new legislation that would increase the CTC and allow pregnant people to claim their expected children.
Child tax credit policy may not seem like it’s a battlefront of the next culture war, but we’re already there. Is the purpose of the credit to protect poor children or to reverse a declining birth rate? Regardless, states have identified tax policy as a way to center children and families in lawmaking—now it’s just a matter of who their tax credits will be designed to serve.