State Child Tax Credits and Child Poverty: A 50-State Analysis
The 2021 federal Child Tax Credit expansion dramatically reduced child poverty and material hardship. Extending the federal policy would provide the broadest poverty reduction nationwide, but states can also build on this success. Heading into 2023, there is increasing momentum for state Child Tax Credits, with ten states already delivering a credit and many others considering one. This report presents state Child Tax Credit options that would reduce state child poverty rates by 25 or 50 percent when coupled with existing federal law, which – now that the 2021 expansion has expired – provides a maximum of $2,000 per child, is not fully refundable, and phases in with earnings. If the federal Child Tax Credit expansion is reinstated, the same state child poverty reduction goals can be achieved with smaller state credits than those identified here.
Key Findings:
Design principles for effective state Child Tax Credits include: full eligibility for children in families with low or no earnings; ensuring per-child benefits; annually adjusting the credit for inflation; and delivering it monthly.
In almost all states, a refundable state Child Tax Credit of $2,000 or less – with a 20 percent credit boost for young children under 6 – would achieve a 25 percent reduction (or more) in the state child poverty rate.
To cut child poverty by half, the majority of states would require a base credit value between $3,000 and $4,500 per child, plus a 20 percent young child boost.
Twenty-five percent child poverty reduction in each state would collectively cost states 2.6 percent of total nationwide state and local revenue under a more universal Child Tax Credit or 1.7 percent of total state and local revenue under a more targeted approach.
Fifty percent child poverty reduction in each state would collectively cost states 7.0 percent of total nationwide state and local revenue under a more universal Child Tax Credit, though two-thirds of states could halve child poverty by dedicating less than 5.5 percent of total state revenue under a more targeted approach.
Suggested Citation:
Collyer, Sophie, Aidan Davis, David Harris, Megan Curran and Christopher Wimer. 2022. “State Child Tax Credits and Child Poverty: A 50-State Analysis.” New York and Washington DC: Columbia University Center on Poverty and Social Policy and Institute on Taxation and Economic Policy.
