Child poverty drops in July with the Child Tax Credit expansion
In July 2021, the first payments of the expanded Child Tax Credit were delivered to 59.3 million children nationwide as part of ongoing economic relief efforts amidst the COVID-19 pandemic. The American Rescue Plan, passed in March, made three important changes to the Child Tax Credit for 2021: increasing benefit levels; expanding access to reach children in families with the lowest incomes; and paying the benefit out in monthly installments.
Using our novel approach to tracking monthly poverty rates, we project that ongoing COVID relief efforts continue to have a sizable effect on reducing child poverty keeping 6 million children from poverty in July 2021 alone (a reduction of more than 40 percent). This impact also resulted in a notable drop in child poverty between June and July 2021, due primarily to the rollout of the expanded Child Tax Credit. On its own, this new payment kept 3 million children from poverty in its first month.
As rollout continues, the expanded Child Tax Credit has the potential to achieve even greater child poverty reduction. If all likely-eligible children are covered, it has the potential to reduce monthly child poverty by up to 40 percent on its own; in combination with all COVID-related relief, it could contribute to a 52 percent reduction in monthly child poverty. Expanding coverage to all eligible children is key to achieving the Child Tax Credit’s full anti-poverty potential, with the greatest gains to be realized for Black and Latino children.
Measuring Monthly Poverty
In 2020, we established a novel method of forecasting poverty to provide monthly projections of poverty using the Supplemental Poverty Measure. Using a monthly framework, we are able to track poverty amidst changing economic circumstances as the COVID-19 pandemic and federal policy responses continue to unfold. Visit our data page to see monthly poverty trends for the US population as a whole, as well as by race/ethnicity and age groups.