In 2021, the American Rescue Plan Act (ARP) expanded the Child Tax Credit (CTC) significantly for one year, making it the largest U.S. child tax credit ever and providing most working families with $3,000 per child under 18 years of age and $3,600 per child six and younger.
The ARP also made the credit fully refundable and provided tax credit options for families to take half the credit in six monthly payments. Between July and December 2021, 39 million households with 65 million children — 88% of children in the United States — automatically received payments of between $250 and $300.
Using the Household Pulse Survey, a collaborative survey done with more than a dozen top federal agency partners to study how the coronavirus pandemic affected households across the U.S. from a social and economic perspective, analysts at Quote Wizard have looked at how families have spent their payments and how child tax credit spending habits vary from state to state.
Child Tax Credit Spending Overall Results
Not surprisingly, most Americans surveyed spent their expanded Child Tax Credit to buy food, clothing and accommodations. Seventy-nine percent of people used part of their credit to buy food, followed by 46% on clothing and 40% each on housing and utilities.
CTC recipients also spent money on vehicle and debt payments (26%), education (21%), childcare (16%), recreational goods (8%), transportation (7%) and afterschool programs (5%). Four percent of responders claimed to have put part of their credit into savings and 2% used some credit to make a charitable donation.
Child Tax Credit Spending by State
Across all spending categories, the survey found that what people spent their child tax credit money on differs from state to state. For example, in the largest spending category, 96% of Alaskans spent their money on food, compared to 58% of people from Rhode Island.
But 61% of people from Rhode Island spent money on housing, while only 23% of people did in Maryland. Sixty-two percent of people from both North Carolina and Oklahoma spent money on clothing, whereas only 31% did in Wyoming.
How Americans Spent the Child Tax Credit
Overall, most people surveyed nationwide said they use their CTC money to pay debts (25%). 18% mostly spent it and 13% mostly saved it.
At the state level, Arizona had the highest number of people putting money toward existing debt (33%), Maine and Vermont had the highest number of people saving money (21%) and Alaska had the highest number of people who spent most of the tax credit (24%).
While the Child Tax Credit monthly payments ended December 2021, the other half of the money can be collected by filing 2021 taxes.