President Joe Biden announced a framework for recovery legislation this week. Included in the compromise agreement was a provision that will radically reduce child poverty.
We are very close to securing permanent access to the Child Tax Credit (CTC) for low-income families and parents who are out of work.
This step—known as full refundability—was one of three important, temporary changes to the CTC passed in the American Rescue Plan Act in March 2021. It has already significantly reduced child poverty.
What is the impact of making the CTC available to all families?
Here’s the impact we are already seeing:
- Before passage of the American Rescue Plan Act, the parents of 27 million kids couldn’t access the full credit because they earned too little money. Now they can.
- Allowing parents with little or no income to get the same CTC benefit as wealthier families is the single biggest driver in huge drops in child poverty we’re seeing this year. Of the 4.1 million kids lifted out of poverty by the CTC expansions in the American Rescue Plan, 3.6 million have been lifted out of poverty because their parents can now claim the full value of the credit, regardless of how little money they make.
- Making the tax credit available to all households regardless of their income does a lot to reduce racial disparities. Black and Latino child poverty rates have fallen by approximately 9 percentage points. Impressively, the disparity between Black and Latino child poverty rates and white child poverty rates were cut by more than 40 percent.
Making the full Child Tax Credit permanently available to low-income families through the Build Back Better Act will be a game changer for those who are trying to build a way out of poverty.
Threats to CTC Access for All Families
There is pressure from some in Congress to institute a work requirement on the Child Tax Credit. A work requirement would take us backwards, preventing parents with very low incomes or no income from accessing the full values of the CTC, ultimately undoing the progress we’ve made in reducing child poverty.
We shouldn’t punish children because their parents aren’t working.
Next Steps in Congress
Permanently enabling parents with little or no income to claim the full CTC is one of the most effective things we can do to reduce child poverty in the United States.
The deal is not done until the Build Back Better Act is signed into law by the President. The stakes couldn’t be higher, and we remain worried about last minute efforts to cut the parts of this package that benefit the people most in need. It is important advocates continue to press for the strongest CTC provisions possible in this bill, especially permanent full refundability of the CTC.
