The Ebb and Flow of Child Poverty Rates In 2021, a surge of hope rippled through the nation as the federal pandemic-era child tax credit expansion lifted countless youngsters from the trenches of poverty. This monumental change, however, was short-lived as Congress let this life-changing initiative lapse. Tragically, the latest U.S. census reveals an alarming spike: child poverty rates soared in 2022, erasing the previous year’s historic gains.
Megan Curran, the voice of the Center on Poverty and Social Policy at Columbia University, expressed her alarm, “We saw it coming, but the sheer scale is still a jolt to the system.” While federal efforts have stalled, states have chosen to be the vanguard. Numerous states have either rolled out new child tax credits or broadened existing ones.
States Charge Ahead: New and Expanded Child Tax Credits
A significant momentum was observed with six states: New Jersey, New Mexico, Vermont, Minnesota, Oregon, and Utah. These territories recently introduced new credits, as revealed by the non-partisan Institute on Taxation and Economic Policy.
With 14 states now providing child tax credits, and even more contemplating similar bills, there’s a renewed vigor in the battle against child poverty. Curran emphasized that “It’s a myth that child poverty is unchangeable. The pandemic, though tragic, taught us that our choices can catalyze monumental change. We have the know-how; it’s time to act.”
Disparity in Child Tax Credit Eligibility
The cessation of the enhanced federal credit has hit the most vulnerable the hardest. Low-income families, once beneficiaries of the full credit, now stand at a disadvantage. The stark reality is that a significant portion of children—especially from rural, single-parent, Black, Hispanic households—are left out in the cold due to parental income constraints.
Mercedes Elizalde, a leader for the Latino community in Portland, Oregon, offered a poignant perspective. She elaborated on the immense benefits of Oregon’s novel child tax credit, particularly for low-income families with young kids, and emphasized the real-world impact of such initiatives. For many families, these credits aren’t about luxury; they’re about covering basics like food, clothing, and medical needs.
“Be it buying shoes for growing feet or handling unexpected medical expenses—every penny counts for these families,” Elizalde shared.
Child Tax Credits in the United States: How Children’s Lives Change
Child Tax Credits are federal tax benefits designed to provide financial support to families with dependent children. They aim to alleviate the financial burden of raising children and help families meet their basic needs. The funding for Child Tax Credits primarily comes from the federal government’s revenue. These tax credits are a part of the larger framework of the U.S. tax system. The government allocates a specific budget for these credits as part of its commitment to social welfare.
Child Tax Credits are awarded during the annual tax-filing process. Families report their eligible children, and the credits are applied to reduce their federal income tax liability. If the tax credit exceeds the amount of taxes owed, the family may receive a refund for the remaining balance.
To qualify for Child Tax Credits in the United States, families must meet specific requirements. Firstly, the child must be under 17 years old at the end of the tax year. Additionally, the child must have a qualifying relationship with the taxpayer, which includes being a biological, adopted, step, or foster child, or a descendant of any of these.
Furthermore, the child must have lived with the taxpayer for more than half of the tax year and must not provide more than half of their own financial support. The child also needs to be a U.S. citizen, national, or resident alien. Finally, there are income limits, with the taxpayer’s income needing to be below a certain threshold to qualify for the full credit, and a gradual phase-out for higher income levels.