Implications of Alternative Designs of the Child Tax Credit

• Published in: The Annals of the American Academy of Political and Social Science 2023-11, Vol.710 (1), p.209-228
• Main Authors: Maag, Elaine, Airi, Nikhita, Collyer, Sophie
• Format: Article
• Language: English
• Subjects: Benefits; Child tax credit; Children; Credit; Families & family life; Policy making; Poverty; Reforms; Tax credits; Taxation
• ISSN: 0002-7162; 1552-3349
• DOI: 10.1177/00027162241272312

The Child Tax Credit (CTC) delivers more economic benefits to children than any other federal program. Under its current design, the CTC provides a benefit of up to $2,000 per child under age 17: almost 90 percent of families with children receive at least some benefits, and families with the lowest incomes receive the least. In 2021, a temporary expansion of the program increased the maximum benefit, delivered up to half the credit as a monthly payment, and allowed families with the lowest incomes to receive the full benefit: millions of families that typically received a partial benefit saw greater economic returns, and the nation saw substantial drops in poverty and hardship. Even in a highly polarized political climate, policymakers continue to consider changes to the CTC that could reclaim some of the benefits that were observed in 2021. This article describes reform options and who would benefit most from various reform approaches.