On May 17, the U.S. Department of Treasury and the Internal Revenue Service (IRS) announced that the agency will issue the first monthly payments of the newly expanded Child Tax Credit (CTC) beginning July 15, 2021. The expansion, which is temporary, passed as part of the American Rescue Plan Act of 2021 (ARPA) in March 2021. The IRS estimates that payments will be automatically made via direct deposit, check or debit card to nearly 39 million households, which include 88 percent of children in the U.S. This historic temporary investment in the CTC is expected to cut child poverty by nearly half – a key county priority.
ARPA increases the size of the CTC from $2,000 per child aged 0–16 to $3,000 per child aged 6–17 and $3,600 for children under age 6 in 2021, half of which is available in the form of advance monthly payments from July to December and the remainder of which will be issued with a 2021 tax return. Additionally, ARPA makes the credit fully refundable in 2021, expanding eligibility to families who typically do not have sufficient income tax liability to receive the full credit, including those without earnings. As a result, an estimated 27 million children will qualify for new levels of direct income support. The credit diminishes for individuals with annual adjusted gross income of more than $75,000, as well as couples earning more than $150,000.
Counties are committed to ending child poverty, which can lead to adverse outcomes in child health, education and future employment. Counties invest $58 billion annually in human service programs that help address both the effects and root causes of poverty. NACo supports legislation that increases and expands the CTC, especially provisions making the credit fully refundable so all families may benefit from it.
On April 6, NACo held a webinar that provided an overview of CTC, as well as outreach and tax assistance strategies to ensure vulnerable families can access these new benefits. Click here to view the recording and here for the slides.
NACo will continue to monitor federal actions and legislation related to child poverty.
For more information on programs in the American Rescue Plan Act of 2021, view NACo’s new funding breakdown interactive tool.
- IRS Child Tax Credit Website
- Tracking COVID Relief for Human Services and Education Programs
- NACo Analysis of American Rescue Plan Act of 2021