More states in the U.S. are starting to see how useful the Child Tax Credit (CTC) can be and are starting to use it as a main tool to fight child poverty. It’s an important way for families, especially those with low or middle means, to take care of their kids in a world where things are getting more expensive. The CTC helps parents pay for the costs of having children by lowering their tax bills. In some cases, it even gives them a return.
In the past few years, politicians in the state have realized how important this policy is. They have started to make their own versions of the CTC bigger, both to help kids who are poor and to make it easier for struggling families to make ends meet. This has made a huge difference for many families, especially the ones who need it the most.
What does the Child Tax Credit really mean?
The government Child Tax Credit is a way for parents to get extra money. It gives up to $2,000 to each child younger than 17 years old. It might look like this will save your life, but the credit has some restrictions, especially for families who are really having a hard time.
The fact that not everyone can get the government CTC is one of the biggest problems. People and families must make at least $2,500 a year before they can get any help. Also, some of the poorest families don’t get the full benefit because only part of the credit is refunded. By leaving this gap open, many kids, especially those from low-income homes, are left out.
Because of this, states have begun to make their own forms of the CTC. Their goal is to close these gaps so that more families can get this important help.
States Spearhead the Battle Against Child Poverty
Five cities and fifteen states will each have their own Child Tax Credit programs by the end of the fiscal year 2025. The main goal of these programs is to assist families with low incomes. In contrast to the federal form, many state credits can be fully refunded. This means that a family can still get the full credit as a return even if they don’t owe taxes.
This is a big change in how the U.S. deals with child poverty. State CTC programs make sure that even the poorest families can get the full credit, which helps lower child poverty rates by a lot. Plus, these programs help families stay stable financially, so they don’t have to deal with problems that make it hard for them to pay for things like food, shelter, and utilities.
How the CTC Can Help Lower Child Poverty
When the Child Tax Credit was briefly increased by the American Rescue Plan Act (ARPA) in 2021, it was a great example of how the credit works. The CTC went up to $3,000 for kids over six and $3,600 for kids under five during that time. Families could also choose to get funds every month instead of waiting until the end of the year. This made it easier for them to stick to their budgets.
The effects were truly amazing. A huge 46% drop in child poverty was caused by the increased CTC, which helped 3.7 million kids get out of poverty. Families across the country could take a deep breath because they knew they had some extra money to work with. But this short-term help stopped in 2022, and since then, the number of poor children has gone back up. Many kids, mostly those from Black and Hispanic families, aren’t getting the full credit they deserve, and poverty is once again on the rise.
What’s the point of a child tax credit?
A Child Tax Credit needs to be well thought out in order to make a change. The most important thing is that it should be fully refunded. That way, people with the most need can still get help, no matter how much money they have. Millions of kids don’t get the help they need because the government program currently leaves out families with low incomes.
Getting rid of economic imbalance is another important issue. Inequality in wealth often hurts families of color the most, and any tax policy that doesn’t take this into account runs the risk of making the gap bigger. A well-thought-out CTC, on the other hand, that helps the most needy families, regardless of race or culture, can be a strong way to close that gap and lower child poverty across the country.
What Will Happen to the Child Tax Credit in the U.S.
The fact that the larger CTC worked so well in 2021 shows how useful this policy can be. The American Rescue Plan Act was only meant to be short-term, but it paved the way for changes that would last longer. That energy has been used by many states to start or grow their own CTC programs, and this is likely to continue in the years to come.
As more states think about starting or growing their own Child Tax Credit programs, politicians will need to look at what the federal government has done. The key to their success is making these credits fully refundable and open to all families, no matter how much money they make. In this way, states can help make society more fair and just so that every child has the chance to grow up without having to worry about being poor.
The Child Tax Credit is more than just a tax break; it helps millions of kids have better futures. We can cut down on child poverty and give every child a fair chance to succeed if we help these families now. Wouldn’t that be a good goal to work toward?
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