Some States Are Fighting Rising Child Poverty With Tax Credits

Parents and caregivers with the Economic Security Project gather outside the White House to advocate for the Child Tax Credit on September 20, 2022 in Washington, D.C. Photo: Larry French/Getty Images for SKDK.

One of the highlights of the American Rescue Plan Act was the federal Child Tax Credit, or CTC, that lifted 3 million children out of poverty. It led to a historic low in the child poverty rate in the second half of 2021, with parents saying that they used the credit payments on rent, child care, utilities, food and school expenses. The credits were effective because they reached the people they needed to target — more than two-thirds of very-low-income families received monthly CTC payments, according to a survey by University of Michigan researchers.

But Congress allowed the credit to expire at the end of 2021, and the child poverty rate more than doubled in 2022, completely reversing any progress, according to recent U.S. Census Bureau data. Black and Hispanic child poverty, which had dipped below 10% in 2021 for the first time in U.S. history, rose to 17.8% and 19.5% in 2022, respectively.