March 23, 2021
The American Rescue Plan makes significant advancements to help families struggling with hunger, including expanding the Child Tax Credit. Join this sign-on letter, led by the Children’s Defense Fund and the Center for the Study of Social Policy, to urge the administration to make the Child Tax Credit investments permanent and ensure this benefit would reach all children who need it. State and national organizations can sign on by March 26 to show support for alleviating child poverty and reducing racial inequities.
The expansion of the Child Tax Credit (CTC) in the American Rescue Plan is a key investment toward creating transformative change in our nation’s efforts to end hunger and address the structural racism that fuels who goes hungry in America. The expanded CTC will dramatically reduce child poverty by 40 percent and reduce the racial wealth gap for millions of households with children. This investment, however, is only a down payment. Making these changes permanent is critical to reducing child poverty and food insecurity.
Anti-hunger stakeholders need to seize this opportunity to lock in the benefits of the rebooted and expanded CTC.
The CTC is an amount of money, determined by income and number of children per household, that a family can claim and receive through their tax return. Designed to help working families offset the cost of raising children, the CTC has long played an important role in lifting children out of poverty and, as the American Rescue Plan projections show, can have even more dramatic impacts when strengthened.
The CTC expansion under the American Rescue Plan will lift 4.1 million children out of poverty and 1.1 million children out of deep poverty, including 1.2 million Black children and 1.7 Latinx children. The full credit will be available to 27 million additional children whose families had too little income to qualify for the credit under previous law, nearly half of whom are Black or Latinx children.
The American Rescue Plan makes four significant changes to the Child Tax Credit that bolster its effectiveness; however, these changes currently only apply for one year, 2021, and need to be made permanent and expanded to reach all children. Below are the key changes.
1) Increases the tax credit amount that can be claimed per child from $2,000 to $3,600 for children under 6 and $3,000 for children 6–17. Individuals who make up to $75,000 per year ($150,000 for joint returns) are eligible for the full CTC, and the CTC decreases by $50 per $1,000 in income above these limits.
2) Expands eligibility so families can claim the credit for children who are 17 years old. Previously, the CTC was only available for children under age 17.
3) Makes the CTC fully refundable, without any income limitations. Previously, only $1,400 was refundable, and tax filers had to have earned income of at least $2,500 in order to receive any refund.
4) Provides advance payments for half of the CTC. The CTC will now be paid in two parts: half as an advance made in six monthly payments, and the rest when claimed on a 2021 tax return. Previously, the CTC was only available when claimed on a tax return.
Sign on to the CTC letter today to ensure that Congress and the Biden administration know why permanently strengthening the CTC is critical to our work to end hunger in America.