Child Poverty

The monthly child tax credit reduced child poverty to 12% during July-Dec 2021. After the tax credit ended, child poverty spiked to 17%.

Monthly child poverty rates, U.S.

Jan 2020-Dec 2022

Source: Center on Poverty and Social Policy at Columbia University. Notes: These monthly estimates are based on the supplemental poverty rate, which includes after-tax income, in-kind benefits, and transfers such as earned income tax credits (EITC), child tax credits (CTC), stimulus checks, and other gov’t benefits.

The chronic stress that impoverished children experience actually disrupts the development of the brain. Uncertainty about whether there will be enough food to eat each day, frequent home moves, exposure to violence, and lack of supervision when parents work irregular schedules in low-wage jobs lead to chronic stress that adversely impacts brain architecture.^1,2 Children living in poverty develop less gray matter volumes which, in turn, negatively impacts their school readiness, and results in later difficulties in memory and self-regulation.³ Large-scale, long-term studies have found that increasing government support for children boosts their academic achievement, increases their earnings as adults, decreases their likelihood of needing government support as adults, and reduces their likelihood of becoming incarcerated.^4,5

From July through December 2021, the American Rescue Plan provided low and middle-income families with monthly Child Tax Credit (CTC) payments. The majority of these families spent these funds on essentials such as housing, utilities, healthier foods, clothing and school supplies.⁶ But after the CTC expiration in December 2021, child poverty spiked to 17%. The Biden administration’s FY24 budget calls for renewing the Child Tax Credit but faces an uncertain future in a deeply divided Congress.⁷ Meanwhile, several non-Southern states have enacted or are considering enacting their own child tax credit programs.^8,9,10

1. “Irregular Work Scheduling and Its Consequences”. Golden. Economic Policy Institute. April, 2015. https://www.epi.org/publication/irregular-work-scheduling-and-its-consequences/ 

2. “Excessive Stress Disrupts the Architecture of the Developing Brain”. National Scientific Council on the Developing Child. January, 2014. https://developingchild.harvard.edu/wp-content/uploads/2005/05/Stress_Disrupts_Architecture_Developing_Brain-1.pdf 

3. “Association of Child Poverty, Brain Development, and Academic Achievement”. Hair, Hanson, Wolfe, and Pollack. JAMA Pediatrics. December, 2015. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4687959/ 

4. “Is the Social Safety Net a Long-Term Investment? Large-Scale Evidence from the Food Stamps Program”. Bailey, Hoynes, Rossin-Slater, and Walker. National Bureau of Economic Research. April, 2020. https://www.nber.org/papers/w26942 

5. “Let the Child Tax Credit work”. Berlin, Gale. Brookings. July, 2022. https://www.brookings.edu/blog/up-front/2022/07/07/let-the-child-tax-credit-work/ 

6. “The impacts of the 2021 expanded child tax credit on family employment, nutrition, and financial well-being: Findings from the Social Policy Institute’s Child Tax Credit Panel (Wave 2)”. Hamilton, Roll, Despard, Maag, Chun, Brugger, and Grinstein-Weiss. Brookings. April, 2022. https://www.brookings.edu/wp-content/uploads/2022/04/Child-Tax-Credit-Report-Final_Updated.pdf 

7. “Biden’s budget pushes to renew bigger child tax credit payments for families”. Konish. CNBC. March, 2023. https://www.cnbc.com/2023/03/10/bidens-budget-pushes-to-renew-bigger-child-tax-credit-for-families.html

8. “Illinois Lawmakers Push for Permanent Child Tax Credit”. Paddock. WTTW. April, 2023. https://news.wttw.com/2023/04/15/illinois-lawmakers-push-permanent-child-tax-credit

9. “Permanent child tax credit pushed by Connecticut comptroller”. Wulfhorst. Fox61. April, 2023. https://www.fox61.com/article/news/politics/connecticut-comptroller-permanent-child-tax-credit/520-4b1ea85b-3d19-4825-8558-ba28d074564d

10. “Tax season 2023: Here are nine states where families can apply for tax credits worth up to $3,400”. Notheis. Washington Examiner. April, 2023. https://www.washingtonexaminer.com/policy/economy/tax-season-2023-nine-states-families-tax-credits-$3400