BEYOND THE NUMBERS
Congress Should Support LGBTQ People With Low Incomes by Expanding the Child Tax Credit and Earned Income Tax Credit
Throughout the year — especially during Pride Month — lawmakers should enact policies that lift up and empower lesbian, gay, bisexual, transgender, and queer/questioning (LGBTQ) people and families, particularly those living in poverty and experiencing financial hardship. Congress should support the economic well-being of the LGBTQ community’s most vulnerable members by expanding the Child Tax Credit and the Earned Income Tax Credit (EITC) for working adults without children.
Homophobia, transphobia, and other intersecting systems of oppression have restricted opportunity and harmed the LGBTQ community for generations. These systems have produced conditions that make LGBTQ people more likely to experience economic insecurity and poverty than their cisgender, heterosexual counterparts. Some 22 percent of LGBTQ adults have incomes below the poverty line, compared to 16 percent of cisgender, heterosexual adults, according to a 2019 Williams Institute report.
Poverty rates vary, however, by race, age, sexual orientation, gender identity, and other demographic characteristics. Racial disparities in poverty rates that exist within the general population are also evident among LGBTQ people, with 37 percent of Latino and 31 percent of Black LGBTQ adults, respectively, living below the official poverty line relative to 15 percent of white LGBTQ adults.
LGBTQ young adults aged 18-24, transgender and gender nonconforming adults, and cisgender, bisexual women have the highest poverty rates (31 percent, 29 percent, and 29 percent, respectively) among comparable LGBTQ adults across age, gender identity, and sexual orientations. About 78,000 cohabiting same-sex couples also lived below the poverty line in 2018, according to Census data using the Supplemental Poverty Measure, which accounts for non-cash benefits and other measurement improvements.
A 2020 Williams Institute study conducted in two California counties suggests that experiencing economic hardship during childhood is a key pathway into poverty in adulthood among LGBTQ people. But when families facing economic insecurity receive additional income, their children’s school performance improves and they are more likely to earn more and be healthier as adults, evidence from a large body of research finds. To set children up for future success, families must have the resources they need and not to be weighed down by the constant stress of poverty.
The 2021 American Rescue Plan demonstrated the important anti-poverty impact that expanding the Child Tax Credit can have on families with low incomes. The expansion under the Rescue Plan raised the credit amount from $2,000 to $3,600 for children under 6 and $3,000 for older children, extended eligibility to 17-year-olds, provided monthly payments to families, and most importantly, made the full credit available to families with little or no income.
That lifted an estimated 3.7 million children above the monthly poverty line in December 2021, reducing child poverty in that month by nearly 30 percent. More than 81,000 families headed by cohabiting same-sex couples in 2021 benefited from this expansion, we estimate. (This estimate is based on Census data, which only provides information about cohabiting same-sex couples. The Child Tax Credit and EITC expansions would also help many LGBTQ adults who are single or who don’t have or reside with same-sex partners, and it would assist LGBTQ children in families where their parents or guardians do not identify as LGBTQ.)
Before the Rescue Plan, roughly 27 million children received less than the full Child Tax Credit or none at all because their families’ earnings were too low. This included roughly half of all Black, half of all Latino children, roughly one-fifth of white children, one-fifth of Asian children, and half of all children living in rural communities. Making the full credit available to these children — called making it “fully refundable” — was the main driver of the child poverty reduction under the Rescue Plan’s Child Tax Credit expansion. A fully refundable, $2,000-per-child credit would lift roughly 2 million children above the poverty line and boost the health, academic achievement, and adult earnings of children across the country.
For LGBTQ adults with low incomes who are not raising children, an expanded EITC would provide much-needed support. The Rescue Plan made an estimated 17.4 million workers — including many LGBTQ people in low-paid jobs — eligible for a larger EITC, including nearly 11 million workers who became eligible for the EITC for the first time.
The Rescue Plan increased the maximum EITC for working adults without children from roughly $540 to roughly $1,500 and raised the qualifying income limit for unmarried workers from $16,000 to $21,000 (and from $22,000 to $27,000 for married couples). Along with extending eligibility to young adults aged 19-24 and adults over age 65, it also lowered the qualifying age to 18 for former foster youth and current homeless youth, two groups in which LGBTQ, Black, and American Indian young adults are overrepresented.
The expanded EITC and the improvements to the Child Tax Credit expired at the end of 2021, cutting or eliminating these important credits for millions of people facing economic hardship. Extending the Rescue Plan’s expanded EITC and expanding the Child Tax Credit, including by making the full credit permanently available to children in families with low or no income, are important ways to support LGBTQ individuals and families living in poverty while helping to address the economic disparities affecting these populations.
- El crédito tributario por hijos
- Federal Payroll Taxes
- Federal Tax Expenditures
- Fiscal Stimulus
- Marginal and Average Tax Rates
- Tax Exemptions, Deductions, and Credits
- The Child Tax Credit
- The Earned Income Tax Credit
- The Federal Estate Tax
- Where Do Federal Tax Revenues Come From?
- Where Do Our Federal Tax Dollars Go?