Inflation relief for families: Biden wants to bring back the expanded child tax credit

Inflation relief for families: Biden wants to bring back the expanded child tax credit—these states are giving their own money

During his second State of the Union address on Feb. 7, President Biden focused on kids with initiatives that would advance global pre-K public school teacher stipends and reinstate the expanded child tax credit.

As part of the American Rescue Plan in 2021, families who fell below certain income thresholds received $3,000 for dependent children ages 6 to 17 and $3,600 for children under six. Half of this money was disbursed through monthly payments. The other half was claimed as a fully refundable tax credit on income tax returns.

A study from Columbia University found that the extra money distributed monthly to families reduced child poverty by more than 25%. The Center for Poverty and Social Policy also reported that the child poverty rate rose from 12.1% in December 2021 to 17% in January 2022 after the end of CTC booster payments.

Fortune reports that ten states have implemented child tax credits after the federal program expired.

New York issued a check in late 2022, or early 2023 that was between 25% to 100% of the 2021 Empire State taxpayer Child Credit or New York State Earned Income Credit. For example, Vermont has offered families earning $125,000 or less $1,000 per child five and under.

According to Forbes, Massachusetts has converted tax deductions for dependents into refundable tax credits worth up to $240 per child for up to two children in a family.

The Center for Policy and Budget Priorities has shared a list of countries that have created or expanded tax credits. New Mexico offers a child tax credit of $175 per child for children under 17. New Jersey offers a child tax credit of up to $500 per child for each child under the age of six. California allows families without income to claim a $1,000 child tax credit for each child under the age of 6.

Other states are looking to pass legislation for 2023 and beyond. Illinois lawmakers, for example, want to provide a child tax credit of up to $700 per child for low- and middle-income families.