Child Tax Credit concept with a calculator, dollar bill, IRS check, and pen
Child Tax Credit concept with a calculator, dollar bill, IRS check, and pen. Credit: Charise Wilson / Shutterstock

The U.S. Census Bureau boosted an effort by congressional Democrats to extend an expanded child tax credit with new data this week showing that the credit contributed to a decline in child poverty in 2021 to its lowest recorded levels. 

The federal government expanded the child tax credit for 2021 through the American Rescue Plan Act. The pandemic relief legislation bolstered the credit in several ways including increasing the maximum credit from up to $2,000 per eligible child to up to $3,600 per child and making it fully available to low or no-income families.

However, ARPA’s changes to the credit were temporary and efforts to extend them were among the casualties of negotiations ahead of the recently passed Inflation Reduction Act. Now proponents of bolstering child tax credit, including Connecticut’s U.S. Rep. Rosa DeLauro, hope that coming negotiations over expiring tax credits for businesses will provide an opportunity to expand tax credits for parents. 

The U.S. Census Bureau provided support for that effort on Tuesday, when it released its annual Supplemental Poverty Measure, a metric of childhood poverty, which stood at 5.2% in 2021, down from 9.7% in 2020. That’s a decline of 46% and the lowest child poverty level on record. 

In its announcement, the Census Bureau attributed much of that decline to the expanded child tax credit. 

“ARPA greatly expanded both eligibility and the value of the CTC,” Census economists wrote. “While the previous analysis looked at the full impact of the CTC, which lifted 2.9 million children out of poverty, [the data] shows how much of that was due to expansion of the CTC. It shows the expansion prevented 2.1 million of those children from falling into poverty.”

DeLauro, along with five other House and Senate Democrats, released a statement Tuesday arguing the data proved the efficacy of the tax credit and highlighted the need to reinstate the expanded program.

“Today’s Census data confirms that the expanded Child Tax Credit worked: it allowed the hard work of tens of millions of parents to pay off and helped them keep up with the cost of living, dramatically reducing child poverty and hunger,” the legislators said. “We should have never allowed this critical program to lapse, and we should not extend corporate tax breaks at the end of this year without also extending the expanded Child Tax Credit.”

In a phone interview Wednesday, Merrill Gay, executive director of the CT Early Childhood Alliance, said the federal tax credit had lifted quite a few Connecticut families above the poverty line. 

“The child tax credit is a clear way to address the problem of child poverty,” Gay said. “Just as Social Security is an income transfer to older families to address adult poverty, similarly the child tax credit addresses that other very vulnerable population of young children in poverty. All the research is really clear that poverty is bad for kids and the more time you spend in poverty, the worse the outcomes.” 

Connecticut launched its own temporary child tax credit this year, offering eligible families tax rebates of $250 per child for up to three children. Single parents making $100,000 or less and joint filers making $200,000 or less had until Aug. 1 to apply for the rebate. As of Aug. 25, the state Revenue Services Department had mailed out about $78 million in rebates to 190,000 families. 

At a $250 per child, Gay said the state program represented a smaller boon for families. 

“When you think about there are many families paying that much for child care per week,” Gay said. “Sure, it’ll help but it’s not going to be the same level of difference that the $3,000 annual credit is.”