Millions of children and families across the country and in Oregon will be lifted out of poverty and receive much-needed economic relief through the expansion of two major Child Tax Credits, provisions of the American Rescue Plan COVID relief legislation, which became law on March 11th, 2021.
A much-needed expansion of Child Tax Credits
The specific Child Tax Credit provisions include 1) expanding eligibility criteria to families of all income levels except those in the highest income brackets, and 2) increasing the maximum credit amount from $2,000 per child to $3,000 per child and $3,600 for children under age 6. The current proposal is set to last for only one year, but advocates are hoping that the extension lasts longer with the anticipated aftereffects of the pandemic into 2022 and beyond.
Americans who have been impacted most acutely by the COVID-19 pandemic, including those with lower incomes, who are Black, Indigenous, and Latino, and/or who can no longer afford basic necessities for themselves and their families, would benefit most substantially as tax credit eligibility expands and tax credit maximums increase. Additionally, these credits are fully “refundable,” meaning families are able to receive the full tax credit amount even if they do not make enough to owe income taxes.
Nearly 800,000 children in Oregon can benefit under these provisions
In Oregon, an estimated 292,000 children under 18 were previously ineligible for the full $2,000 tax credit due to the existing income threshold. However, under the CTC expansion, approximately 779,000 children under 18 can benefit from the expansion of tax credit eligibility. This includes roughly 294,000 Black, Latino, Asian, and other/multiracial children whose families and livelihoods have been disproportionately hard hit by the pandemic.
Post updated June 16th, 2021
Estimated Children Under 17 Previously Left Out of the Full $2,000 Child Tax Credit, by Race/Ethnicity
*N/A indicates reliable data are not available due to small sample size.
Estimated Number of Children Who Can Benefit from House Child Tax Credit Expansion
Estimated Number of Children Under 18 Who Can Benefit from House Child Tax Credit Expansion, by Race/Ethnicity
Nationally, the expanded CTC will significantly reduce poverty in childhood
Previously, a staggering 27 million children across America, including approximately half of all Black and Latino children and a similar proportion of rural children, received less than the maximum $2,000-per-child tax credit due to parental income being below the income threshold of eligibility. Therefore, the widening of eligibility criteria to cover all low- and middle-income children is expected to lift some 4.1 million American children above the poverty line, 1.2 million of whom are Black and 1.7 million of whom are Latino, expanding eligibility for approximately 65.7 million children. This is equivalent to 90% of all children under 18, and is estimated to result in a reduction by more than 40% of children experiencing poverty (from 13.6% to 7.5%).
Notably, the Child Tax Credit expansion will be of substantial benefit to a diverse array of essential and frontline service providers who are disproportionately women and people of color. These workers, who include truck and delivery drivers, cashiers, retail sales, and others, typically have lower wages, are in positions of greater risk of exposure, have more erratic work schedules, and face greater difficulty securing stable childcare.
Further, it is vital that the Child Tax Credit be extended to families filing their taxes using an Individual Taxpayer Identification Number (ITIN), along with other aspects of the COVID-relief legislation, including receipt of forthcoming and retroactive stimulus payments. While the COVID-relief bill in December 2020 partially fixed the exclusion, too many families remain on track to not receive the support and benefits this legislation provides. At the state level, legislation is moving in Oregon to extend a separate tax credit to ITIN filers, the Earned Income Tax Credit (EITC). HB 2819 is a priority of the 2021 Children’s Agenda.
The expansion of these tax credits will provide necessary and greatly needed relief to children and their families, and take sweeping steps to reduce childhood poverty nationwide.