The American Families Plan is an opportunity to sustain poverty reduction

This fact sheet provides an analysis of the poverty reduction effects of a set of policy elements in President Biden’s proposed American Families Plan. In a prior analysis, we estimated poverty rates for 2021 under the American Rescue Plan. These policies are temporary and we find that after they expire, poverty rates in 2022 are likely to return to, or exceed, pre-pandemic levels without additional action. The proposed American Families Plan continues a set of pandemic-era supports—specifically, expansions to the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit—and includes additional items geared towards building family economic security. 

We project that these policies will reduce the national poverty rate in 2022 by nearly one-quarter (23%) and the child poverty rate by nearly half (47.4%), relative to the projected poverty rates for 2022 without the American Families Plan. This could sustain the progress made towards reducing poverty in the United States projected under the American Rescue Plan beyond 2021. 

Our analysis projects annual poverty rates for 2022 before and after accounting for the following policies:

• A fully refundable Child Tax Credit valued at $3,000 (ages 6-17) and $3,600 (under 6)

• An expansion of the Earned Income Tax Credit for workers without children

• An expansion of subsidized child care for low- and middle-income families

• An expansion of the Child and Dependent Care Tax Credit

• An expansion of the Summer Electronic Benefit Transfer (EBT) Program to all eligible children nationwide

• An expansion of the Pell Grant that increases the maximum annual award by $1,400.

The American Families Plan includes a number of other items likely to impact poverty, including guaranteed paid leave, an expansion of school meals, investments in the child care workforce, investments in education and higher education, and more. This analysis does not account for these items. Our results are based on policy parameters available at the time of the modeling.