Child Tax Credit Payments Pulled 3 Million Children Out of Poverty: Study

Child Tax Credit Payments Pulled 3 Million Children Out of Poverty: Study


The temporary boost to the child tax credit included in the Covid relief package passed earlier this year prevented about 3 million children from being in poverty in July, according to an analysis by researchers at Columbia University.

The $1.9 trillion American Rescue Plan, which President Joe Biden signed into law in March, made three changes to the child tax credit that helped produce those results: 1) it increased the value of the credit from $2,000 per child to $3,000 or $3,600, depending on age; 2) it expanded access to reach more families, especially poorer ones that don’t file tax returns; and 3) it required a portion of the tax credits to be paid out directly in monthly installments, starting in July.

The first batch of payments was provided to households with 59.3 million children, the researchers said, and was primarily responsible for reducing the U.S. child poverty rate from 15.8% in June to 11.9% in July.

More broadly, the researchers found that all Covid relief measures – including extra unemployment benefits, stimulus checks and food assistance – kept roughly 6 million children from being in poverty during the month of July.

The tax credit program is expected to reach even more children in the coming months as more households sign up. Researchers estimate that as many as 3 million children are not yet receiving the benefit. The payments went out to households with about 61 million children in August, which should further reduce the poverty rate.

The enhanced child tax credit is scheduled to expire in December, although Democrats aim to pass a longer-term extension of the program as part of the $3.5 trillion budget plan currently under construction and debate in Congress.