Research Roundup of the Expanded Child Tax Credit: One Year On

Research Roundup of the Expanded Child Tax Credit: One Year On

Megan A. Curran

Journal paper

Poverty & Social Policy Report

2022

The American Rescue Plan significantly expanded the 2021 Child Tax Credit, increasing benefit levels and making more than 90 percent of children nationwide eligible—almost all but those in the highest earning families. From July through December 2021, the Internal Revenue Service (IRS) delivered the expanded credit in six monthly payments, reaching over 61 million children in more than 36 million households. Families received the second half of their credit, a lump-sum payment worth the remaining six months’ value, at tax time in spring 2022. A continuous stream of research has tracked the impact of the Child Tax Credit expansion, documenting notable reductions in poverty, food insecurity, and financial hardship, as well as the impact of the expansion’s expiration—which saw increases in poverty and other hardships. A challenge has been how best to understand this regularly evolving evidence base. This research roundup compiles what we know as of early November 2022, close to one year on from the last monthly Child Tax Credit payment. It reviews the wide range of available information—analyses of national and local surveys, focus groups, expenditures, and more—on families’ access and receipt of the payments, how families used them, how the payments impacted their lives, and what happened when the payments ended in 2022. This is an update to the original Child Tax Credit research roundup, published in December 2021, that documented what we knew from research available after the first six months. Evidence is now reviewed across nine central themes: access; income; poverty; spending; food; financial hardship; differences by payment type (e.g., monthly vs. lump-sum); employment; and equity. For each theme, the original December 2021 findings feature first (What We Knew After 6 Months) and the new additions follow (Update: One Year On). The updates also include available information on how families have fared in 2022 after the expanded Child Tax Credit expired. The weight of the evidence is clear: while in place, the expanded Child Tax Credit reached the vast majority of families with low, moderate, and middle incomes; shored up family finances amidst the continuing COVID-19 and economic crisis; helped reduce child poverty to the lowest level on record; decreased food insufficiency; increased families’ ability to meet their basic needs; and had no discernable negative effects on parental employment. Since its expiration, however, many families with children have seen a reversal of fortune directly attributable to the loss of the credit—including lower disposable income and increased poverty, food hardship, and financial strain. Combined with recent inflation trends, the expiration of the expanded Child Tax Credit has posed an ongoing challenge for families nationwide.