Inflation Relief for Families: Biden Wants Expanded Child Tax Credit Back — These States Provide Their Own
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Dawn Allcot
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Cory Dudak
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During his second State of the Union address on Feb. 7, President Biden put a focus on children, with initiatives that would introduce Universal Pre-K, higher public school teacher’s salaries and bring back the expanded Child Tax Credit.
As part of the American Rescue Plan in 2021, families who fell below certain income thresholds received $3,000 for dependent children between the ages of 6 and 17, and $3,600 for children under 6. Half of that money was disbursed through monthly payments. The other half was claimed on income tax returns as a fully refundable tax credit.
A study from Columbia University found that the extra money, distributed monthly to families, reduced child poverty by more than 25%. The Center on Poverty & Social Policy also reported that the child poverty rate rose from 12.1% in December 2021 to 17% in January 2022, after the enhanced CTC payments ended.
Ten states implemented their own child tax credits after the federal program expired, Fortune reported.
New York issued a check in late 2022 or early 2023 that was between 25% to 100% of a taxpayer’s 2021 Empire State child credit or New York State earned income credit. For instance, Vermont provided families earning $125,000 or less with $1,000 per child 5 and under.
Massachusetts turned tax deductions for dependents into refundable tax credits worth as much as $240 per child for up to two children in a household, according to Forbes.
The Center on Budget and Policy Priorities shared a list of states that have created or expanded tax credits. New Mexico offers a child tax credit of $175 per child for children under 17. New Jersey provides a tax credit of up to $500 per child for each child under the age of six. California has made it possible for families without any earnings to claim a $1,000 per child tax credit for each child under age 6.
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Other states are looking to pass legislation for 2023 and beyond. Illinois legislators, for instance, want to introduce a child tax credit of up to $700 per child for low- and middle-income families.
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