Brittani Barnett remembers the financial security she felt for six months in 2021 when she received an extra $300 a month from the expanded child tax credit.
The single mother of three from Charlotte, N.C., bought clothes for her youngest daughter, then five, and helped her son with a down payment on a car so he could go to work and help his sister get around.
“For me, the supplement meant an extra cushion every month. You knew it was coming,” said Barnett, who is starting a job in her state with the Low Income Energy Assistance Program.
The monthly payments expired in December 2021, but Vice President Kamala Harris wants to restore and improve credit if she wins the White House.
Donald Trump’s running mate, JD Vance, has proposed increasing the amount of the child tax credit, but the Trump campaign has not endorsed that effort. It wants to make permanent the tax changes Trump ushered in in his first term, which expanded the amount of the child tax credit from $1,000 to $2,000 per child.
In the short time since it was introduced, the expanded credit has already shown what it can do to combat poverty and hunger. Bringing it back now could ease the economic pressure that Americans continue to report from higher prices, especially among the most financially vulnerable families.
“If they brought it back now that would be helpful, especially now with inflation,” Barnett said. “I struggle every day with figuring out what we can afford to eat and what is beneficial for our health.”
Brittani Barnett (left) received an additional $300 per month from the expanded child tax credit in 2021. “If they brought it back now that would be helpful, especially now with inflation,” she said. (Photo courtesy of Brittani Barnett)
Under the American Rescue Plan Act, the child tax credit gave families $3,600 for each child in the household under the age of 6 and $3,000 for each child between the ages of 6 and 17. That was more than the credit’s original maximum value of $2,000 per child.
In addition, the relief package made the credit fully refundable, eliminating minimum income requirements that kept the poorest families from qualifying for the full credit. Half of the credit was distributed to families in monthly installments from July 2021 to December 2021 — the payments that helped Barnett and millions of families keep up with the ongoing costs of raising children.
As a result of these changes – especially credit repayability – the child poverty rate reached an all-time low of 5.2% in 2021, while food shortages among low-income families fell by 25%.
Other studies found that the payments allowed parents to stay current on their bills, build savings and even start a business. Telephone interviews conducted by the Center for Law and Social Policy (CLASP) after the expansion revealed that parents were also able to throw a birthday party for their child for the first time or afford an instrument so that their child could join their high school marching band. could connect.
“One theme that really struck me is that these payments aren’t just going to bills, food and groceries,” said Ashley Burnside, senior policy analyst at CLASP. “But it also helped parents be able to say yes to many of these experiences that their children wanted and to create these positive moments that can make parenthood and childhood so special.”
Read more: Child tax credit: everything you need to know for the 2023 tax year
In this March 3, 2015, file photo, a child is lifted by her parents on a street corner in downtown Seattle. (AP Photo/Ted S. Warren, file) ·ASSOCIATED PRESS
Crystal D., a single mother in Grand Blanc, Michigan, was able to afford the private tutoring and mental health care her now 9-year-old son needs. She received about $250 a month thanks to the expansion of the pandemic child tax credit.
Now, when she is not at her workplace in a nursing home as an occupational therapist, Crystal spends her time looking for alternative ways to provide these services because she cannot afford the full costs on her own.
“It was very difficult,” said Crystal, who did not want her last name published to maintain some privacy for her son. “At public educational institutions, there is usually a one-year waiting list, so I can’t get the services he needs immediately.”
In total, more than 36 million families with 61 million children received nearly $93 billion in prepaid child tax credits in 2021. In December 2021, the average payment was $444.
Since the expiry date, a large part of the good from the credit has been settled. The child poverty rate will more than double to 12.4% in 2022, “the largest increase on record,” Burnside said. Interest rates continued to rise last year, reaching 13.7%.
Vice President Kamala Harris delivers remarks at the White House on February 8, 2022, encouraging Americans to take advantage of tax benefits, including the expanded child tax credit and the income tax credit. (AP Photo/Patrick Semansky) ·ASSOCIATED PRESS
The Harris campaign wants to go further than just reinstating the expanded child tax credit. The Democratic presidential candidate wants to give new parents $6,000 for their baby’s first year of life.
That influx of money would come at a critical time when new parents are having to spend so much money on hospital bills, car seats, strollers, formula and “just exorbitant amounts of money for diapers,” said Ailen Arreaza, executive director of ParentsTogether Action, a national nonprofit organization for parents.
“For new mothers and fathers, there is so much coming at them from all sides. Having a newborn can be very, very difficult,” she said. “And this is something that can ease that burden a little bit and that’s what families deserve.”
Overall, the expanded child tax credit — in addition to expanding the income tax credit and providing a homebuyer credit that Harris also proposed — would largely benefit low- and middle-income households, according to an analysis by the Tax Policy Center.
It would reduce tax revenues by nearly $1.6 trillion between 2025 and 2034 compared to current law, the analysis found. But the long-term effects may be worth the cost.
A working paper released this summer modeled what would happen if the expansion of the child tax credit were made permanent. The findings? It would lead to higher future incomes and tax payments, better health and longer lifespans, and a decrease in health care, crime, and child protection costs. The paper states that the benefits to society outweigh the costs almost 10 to 1 – largely due to making the credit fully repayable.
“We’ve been getting all this rich data from people saying, ‘I need to spend time with my family in ways I wasn’t doing before,’” said Lauren Reliford, director of policy at Children’s Defense. Fund.
“And if a parent can actually spend time with their child, [that] is actually very important for optimal results as you mature,” she added.
“As a society, what is a better benefit?”
Janna Herron is a senior columnist at Yahoo Finance. Follow her on X @JannaHerron.
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