What Could 2023 Child Poverty Rates Have Looked Like Had an Expanded Child Tax Credit Still Been in Place?
In September 2024, the Census Bureau released data on poverty in 2023. In 2021, the child poverty rate fell to a historic low of 5.2%, due in large part to the substantial—but temporary—expansions to the federal Child Tax Credit under the 2021 American Rescue Plan. In 2022, the child poverty rate more than doubled, rising from 5.2% to 12.4%—the largest year-over-year increase on record. The latest Census Bureau data shows that the child poverty rate rose further in 2023, to 13.7%. The sharp and sustained increase in child poverty since 2021 has bolstered calls to permanently expand the Child Tax Credit in a similar way to 2021. This raises the question: what could child poverty rates in 2023 have been if an expanded Child Tax Credit had been in place? To answer this question, we model one example of a proposed expansion, the 2023 American Family Act (H.R. 3899), in the 2023 data.
Key Findings
From 2022 to 2023, the SPM child poverty rate rose from 12.4% to 13.7%, remaining significantly higher than the 2021 historic low of 5.2%. Approximately 6.2 million more children were living below the poverty line in 2023 than in 2021.
Under current policy, the Child Tax Credit reduced child poverty by 17.1% (from a child poverty rate of 16.5% without any Child Tax Credit to 13.7%). It kept 2 million children from poverty in 2023.
Had an expanded Child Tax Credit—such as the 2023 American Family Act—been in effect in 2023, the child poverty rate could have instead been 8.6%.
On its own, the 2023 American Family Act Child Tax Credit could have reduced child poverty by 47.8%, and kept a total of 5.6 million children from poverty.
Compared to current policy, the 2023 American Family Act could have reduced child poverty by 37.1% and kept an additional 3.6 million children out of poverty in 2023. The expanded credit’s effect on poverty remains substantial under an array of potential employment responses.
Suggested Citation:
Koutavas, Anastasia, Christopher Yera, Sophie Collyer, Megan Curran, and David Harris. 2024. What could 2023 child poverty rates have looked like had an expanded Child Tax Credit had still been in place? A poverty reduction analysis of the 2023 American Family Act. Poverty and Social Policy Brief, vol. 8, no. 3.