The challenge
Millions of American children were living in poverty.
The case
The 2021 American Rescue Plan Act raised the Child Tax Credit for that year from $2,000 per child to $3,600 for each child under 6 and $3,000 for each child aged 6 through 17, and made it fully refundable. The IRS paid half of it in monthly payments during the second half of 2021, starting on 15 July. Child poverty under the Census Bureau's Supplemental Poverty Measure, which counts tax credits and benefits, fell to a record low in 2021. Using corrected 2026 figures, it fell from 9.6% in 2020 to 5.1% in 2021, then rose to 12.0% in 2022 after the expansion and other pandemic measures expired.
Why it worked
Getting cash to families with children, including those with the lowest incomes, cut child poverty to its lowest recorded level within a year. When the expansion lapsed, child poverty more than doubled, which the Census Bureau attributed to the expiry of the expanded tax credits and the end of stimulus payments.
Sources
- Burns, K., Fox, L., & Wilson, D. (2022). Expansions to Child Tax Credit contributed to 46% decline in child poverty since 2020. US Census Bureau.
- US Census Bureau (2023). Income, poverty and health insurance coverage in the United States: 2022 (press release).
- Creamer, J. (2026). Revising Supplemental Poverty Measure estimates from 2019 to 2024. US Census Bureau SEHSD Working Paper 2026-17.
- Internal Revenue Service. Tax year 2021 Child Tax Credit frequently asked questions: Topic A, 2021 Child Tax Credit basics.
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