In calling to revive the Democrats’ enhancement of the child tax credit in 2021, President Biden pointed to the fact that the provision helped slash the child poverty rate that year.
“Let’s restore the full child tax credit, which gave tens of millions of parents some breathing room and cut child poverty in half, to the lowest level in history,” he said.
Facts First: This is true. The child poverty rate was cut nearly in half in 2021, and the expanded child tax credit was the major factor. The enhancement accounted for the bulk of the reduction.
The child poverty rate fell from 9.7% in 2020 to 5.2% in 2021, according to the US Census Bureau’s Supplemental Poverty Measure, which takes into account certain non-cash government assistance, tax credits and needed expenses.
That’s a reduction of 46%, sending the rate to the lowest level since the supplemental measure began in 2009.
The child tax credit – both the traditional credit and the enhancement – reduced the child poverty rate from 9.2% to 5.2%, or 43%, according to the Census Bureau. Without the beefed-up credit, the rate would have only fallen from 9.2% to 8.1%, or 12%.
As part of the $1.9 trillion American Rescue Plan Act that passed in March 2021, Congress enhanced the child tax credit for one year, beefing up payments to $3,600 for each child up to age 6 and $3,000 for each one ages 6 through 17, for lower- and middle-income families. For the first time, half the credit was paid in monthly installments from July through December, while parents could claim the other half when they filed their 2021 taxes this year.
Also, more low-income parents became eligible for the full amount because lawmakers made it fully refundable.