Child Tax Credit Benefits
The child tax credits advanced to families in 2021 have benefited 61 million kids or 84% of U.S. children. Some 4 million eligible children may still be missing out.
Percent of children who received Child Tax Credit benefits, by state
Dec 2021
Source: U.S. Department of the Treasury and Census Bureau Vintage 2020 PEP. Notes: Calculated as total children qualifying for child tax credit (CTC) payments divided by total children in the state.
Several studies of the impact of the Child Tax Credit since its inception in 1998 have found that this financial support for children helped increase student test scores, reduce teen birth rates, and yield higher earnings in adulthood.1 For 20 years, the CTC received strong bipartisan support and was increased several times, most recently in 2018 when the credit was increased to $2,000.2 In July 2021, the federal government began paying up to $3,600 in annual tax credits per child. For the first time, these payments were available to families with no earnings at all. The credits were sent to all households that filed a tax return in 2019 or 2020 or claimed their “stimulus” payments via a special IRS portal.
By December, 61 million children had received the benefit. But an estimated 4 million eligible low-income children did not receive the benefit (nor their stimulus payments).3 Because higher-income families are not eligible for the credit, some high-income states have smaller shares of eligible children. But Louisiana stands out as a state with a high poverty rate (18%) but only 82% of the child population receiving CTC benefits. Eligible families can claim the full benefit by filing a tax return in early 2022.3 State and local outreach efforts must be ramped up, and organizations that provide no-cost tax filing services will need additional capacity to ensure they can assist more eligible families in accessing this benefit.
“New Evidence on the Long-term Impacts of Tax Credits”. Chetty, Friedman, and Rockoff. November, 2011. https://www.irs.gov/pub/irs-soi/11rpchettyfriedmanrockoff.pdf
“PUBLIC LAW 115–97–DEC. 22, 2017”. https://www.govinfo.gov/content/pkg/PLAW-115publ97/pdf/PLAW-115publ97.pdf
“State and Local Child Tax Credit Outreach Needed to Help Lift Hardest-to-Reach Children Out of Poverty”. Cox, Caines, Sherman, and Rosenbaum. Center on Budget and Policy Priorities. August, 2021. https://www.cbpp.org/research/federal-tax/state-and-local-child-tax-credit-outreach-needed-to-help-lift-hardest-to-reach