Why Upcoming Child Tax Credit Payments Are a Good Thing for Retailers

A pre-school age girl helps her parents pick out veggies in the produce section at the grocery store.
FatCamera / Getty Images/iStockphoto

Thanks to monthly child tax credit payments beginning this month, U.S. retailers could soon see an uptick in sales if the payments act as a stimulus that encourages Americans to spend on food, clothes, school supplies and other items, CNBC reported. 

See: Shop These Small Businesses During Independent Retailer Month
Find: The Effect of Consumer Spending on Inflation

The recent child tax credit expansion increases the benefit from the typical $2,000 annual credit to $3,000-$3,600 per qualifying child, depending on the child’s age. Half will be paid out in monthly payments beginning July 15 and continuing until December 15. You’ll claim the other half of the credit when you file your 2021 tax return.

The expanded credit was passed as part of the American Rescue Plan and was intended to help fight child poverty. The payments will be the latest government-funded benefit paid to Americans. Big retailers like Walmart and Best Buy reported increased sales after consumers received stimulus payments, CNBC pointed out. 

Save for Your Future

According to the IRS, as reported by CNBC, about 39 million households, which include nearly 90% of children in the U.S., will receive a total of $110 billion through the enhanced child tax credit, with $55 billion of that paid out through the monthly payments, CNBC reported, citing the Joint Committee on Taxation. 

See: How the Child Tax Credit Will Affect Your 2021 Taxes
Find: 11 Ways to Spend Less at Target

These payments will be especially helpful for moderate- and low-income families, Jim Sullivan, an economics professor at the University of Notre Dame, told CNBC. Sullivan noted that these families tend to spend money immediately on necessities like food, rent and monthly bills.

Retailers like Walmart are optimistic about consumers’ overall desire to start shopping again as the pandemic eases. “In the U.S., customers clearly want to get out and shop. We have a strong position as our store environment improves and eCommerce continues to grow,” Walmart President and CEO Doug McMillon stated in a release. He added that the company anticipates “continued pent-up demand throughout 2021.”

More From GOBankingRates

About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.

Untitled design (1)
Close popup The GBR Closer icon

Sending you timely financial stories that you can bank on.

Sign up for our daily newsletter for the latest financial news and trending topics.

Loading...
Please enter an email.
Please enter a valid email address.
There was an unknown error. Please try again later.

For our full Privacy Policy, click here.