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How has the Child Tax Credit impacted household income in the US?

The expanded programme was designed to boost the earnings of low-income families and early studies suggest that it has cut childhood poverty in the US.

The expanded programme was designed to boost the earnings of low-income families and early studies suggest that it has cut childhood poverty in the US.

The expanded Child Tax Credit was designed to provide additional support for American families as they struggle through the economic fallout of the pandemic. Currently, the beefed-up programme is only funded for one year but there are hopes that it can be extended further.

The early signs suggest that it is having a positive effect on American society and has been linked to an increase in household income for July, the first month in which the payments were sent.

The Bureau of Economic Advisors from the Department of Commerce found that personal income increased by 1.1% ($225.9 billion) in July. At the same time, disposable personal income rose by 1.1% ($198 billion) and personal consumption expenditures increased by 0.3% ($42.2 billion).

August Child Tax Credit payments reached 61 million children

One of the main concerns with the new Child Tax Credit was getting the support out to low-income families, whose information may not currently be on file with the IRS. However the tax agency confirmed last month that it had been able to get the money to the parents of approximately 61 million children.

To help get more households signed up for the support, the Treasury Department and the White House have introduced a new online portal which is designed to make it easier to use. The new resource, GetCTC, went live earlier this week and is available in both English and Spanish and is mobile phone compatible.

Child Tax Credit lifts 3.3 million households out of poverty

Although the expanded programme is still relatively new, researchers are beginning to find that the monthly payments have resulted in a decrease in childhood poverty across the country. The Census Bureau’s Household Pulse Study, conducted between 4 and 16 August, found that the number of adults living in households with kids that reported not having enough to eat has fallen by 3.3 million. This represents a decrease of almost a third.

In a recent report on the impact of Child Tax Credits, Claire Zippel, senior research analyst at the Center for Budget and Policy Priorities, said: “The improvement in food hardship among families with children after the Child Tax Credit payments was truly remarkable.”

She added: “Such a dramatic increase really indicates that we’re on the right trajectory in terms of helping provide families with the resources that they need.”

The expanded Child Tax Credit has broadened eligibility to ensure that low-income families are not excluded from the payments. In the past, households earning below a certain threshold were not eligible for the full entitlement.

Removing that threshold has made the full amount available to an additional 27 million children who would previously have missed out on some or all of the money.


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