According to the U.S. Census Bureau, child poverty in the country reached a record low last year, in part as a result of the American Rescue Plan Act’s growth of the governmental child tax credit. The program ends at the end of 2021, but a new study indicated that states might carry on the pattern with their own CTC laws.
As per the Institute of Taxation & Economic Policy, a refundable state child tax credit of $2,000 or less combined with an additional 20% for children under the age of six would reduce child poverty by 25% or more in the majority of states.
Families Impacted By The Earning Criteria
Families with incomes up to $400,000 are currently eligible for a $2,000 tax credit per child. The difference isn’t given to the person if their tax liability is less than the credit value because that amount isn’t completely refundable. Families with extremely little or no income as a result frequently aren’t entitled to credit. According to the research, families of color are disproportionately impacted by the earning criteria, and 50 percent of all Black & Hispanic kids are ineligible for the credit.
Families with small children, single parents, large households, and rural families are frequently barred from the program. According to the research, it would cost 2.6% of complete state and municipal revenue to reduce child poverty by 25%. This figure reduces to 1.7% if interventions are restricted to helping families with extremely low incomes.
With programs that involve some middle-class families, halving child poverty would cost around 7% of total state and municipal revenue. To do this, the majority of states would require a base credit of $3,001 to $4,500.
States Have Also Enacted Child Tax Credits
Tax credits for children seem to be increasing in popularity. California was the first state to establish a statewide child tax credit in 2019. Households with children below six who make less than $30,000 can receive up to $1,000. Since then, nine additional states have also enacted child tax credits, which range from an Oklahoma nonrefundable credit of $100 to a Vermont fully refundable credit of $1,000. New Jersey, New Mexico, and Vermont were the most recent to adopt their regulations earlier this year. While the eligibility conditions vary from state to state, certain state policies are ongoing while others are scheduled to expire shortly reports Route-fifty.
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