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Child Tax Credit Expansion Passed by Congress Will Help 13 Million Children

Nursing Home Aides, Cooks, Pre-School Teachers, and Construction Workers Will Get a Boost

A recently enacted Child Tax Credit provision will benefit 12.9 million children — 2.4 million who will become newly eligible for the benefit and 10.5 million who will see their credit increased because of it — according to the Urban Institute-Brookings Institution Tax Policy Center. These almost 13 million children come from families with parents who work in such jobs as nursing home aides, cook, pre-school teachers, and construction workers. This provision was among the tax measures included in the financial rescue legislation in October.

Families that are “newly eligible” are those with incomes between $8,500 and $12,050. A broader group of low-income families will see their credit increase as a result of this provision, because the size of their credit is based on the amount by which the family’s earnings exceed the threshold. Specifically, the provision will temporarily expand the credit by lowering — for tax year 2008 — the earnings threshold that families must meet to qualify for the refundable portion of the credit.[1] Families will qualify for a refundable credit if their earnings exceeded $8,500; if the provision had not been enacted, families would have needed earnings above $12,050 in 2008 to qualify for the refundable child tax credit.

Because the expansion covers only 2008, Congress must decide whether to enact the $8,500 threshold permanently or to extend it on a yearly basis along with other expiring tax provisions.

Who are the families that will benefit in 2008? Census data[2] provide important information about these families and the jobs the parents hold:

  • Most of the children helped live in families in which a parent works throughout the year. Some 70 percent of the children who will benefit live in families in which a parent works 30 or more hours per week for at least 50 weeks during the year. A majority of the remaining families experienced periods of unemployment during the year, but when employed worked at least 30 hours per week.
  • Many of the children helped live in families that include individuals with disabilities. Nearly one in ten of the children — 1.1 million children — who will benefit live in a family where either a parent or a child has a disability. An expanded Child Tax Credit will provide assistance to these families in which parents struggle to maintain jobs and meet the health and other expenses they incur due to the disability.
  • The parents who will be assisted work in a broad range of low paying jobs; many perform difficult jobs that provide critical services, such as caring for the elderly or teaching young children. 
    • 480,000 parents provide health care services to the elderly or the ill as nursing home workers, home health aides, personal care assistants, medical assistants, and other low-paid health care professionals.
    • 240,000 parents provide child care, serve as teaching assistants, or are preschool or kindergarten teachers.
    • 310,000 parents earn a living by cleaning or maintaining the grounds of homes, office buildings, schools, or other community institutions.
    • 410,000 parents work as cashiers in grocery stores and a broad array of other businesses.
    • 470,000 parents work as cooks, waiters or waitresses, or assist cooks with food preparation.
    • 360,000 parents earn a living as construction workers, carpenters, or painters.
    • 120,000 parents work as laborers in the agriculture sector.

Table 1 provides state-by-state estimates of the number of children who will benefit from the Child Tax Credit provision passed by Congress.

Number of Children Who Will Benefit From the Child Tax Credit Provision Passed By Congress

State Children Newly Eligible for the Credit Children Receiving a Larger Credit
Alabama 43,100 189,000
Alaska 4,400 19,200
Arizona 63,000 276,200
Arkansas 27,600 121,100
California 375,500 1,646,300
Colorado 33,500 146,700
Connecticut 16,000 70,200
Delaware 5,200 22,800
D.C. 3,800 16,500
Florida 138,900 609,200
Georgia 79,100 347,000
Hawaii 9,100 39,900
Idaho 15,300 67,100
Illinois 94,000 412,100
Indiana 48,000 210,400
Iowa 18,300 80,200
Kansas 22,500 98,500
Kentucky 30,400 133,100
Louisiana 41,500 181,900
Maine 6,800 30,000
Maryland 28,900 126,600
Massachusetts 26,400 115,700
Michigan 72,300 316,900
Minnesota 28,500 125,200
Mississippi 30,300 132,900
Missouri 45,400 199,100
Montana 6,800 29,700
Nebraska 12,300 54,000
Nevada 21,700 95,200
New Hampshire 3,800 16,700
New Jersey 47,900 210,000
New Mexico 22,300 97,600
New York 132,100 579,100
North Carolina 78,800 345,700
North Dakota 3,700 16,200
Ohio 77,400 339,600
Oklahoma 32,900 144,200
Oregon 28,600 125,500
Pennsylvania 75,200 329,600
Rhode Island 6,900 30,400
South Carolina 37,200 163,300
South Dakota 5,800 25,500
Tennessee 49,000 215,100
Texas 282,600 1,239,000
Utah 25,300 111,100
Vermont 3,900 17,000
Virginia 41,600 182,500
Washington 43,200 189,600
West Virginia 14,600 63,900
Wisconsin 33,100 145,200
Wyoming 3,500 15,300
United States 2,400,000 10,500,000


End Notes

[1] Because the provision approved by the Senate Finance Committee will lower the refundability threshold for the Child Tax Credit for one year only, it does not address the issue of de-indexing the threshold from inflation. (The income threshold at which the credit becomes available currently increases each year with inflation, even when — as in recent years — the earnings of low-wage workers do not keep pace with inflation.) For further discussion of the inflation-indexing issue, and a more detailed discussion of the need to improve the refundability of the Child Tax Credit, see Aviva Aron-Dine, “Improving the Refundable Child Tax Credit,” Center on Budget and Policy Priorities, revised May 19, 2008.

[2] All of the figures presented here are CBPP calculations based on the March 2006 Current Population Survey. Estimates of the number of children who will benefit from the Child Tax Credit provisions that are based on the March 2006 Current Population Survey are somewhat lower than those computed by the Tax Policy Center. Because TPC has more complete data on tax filing units and tax filers’ taxable income than are available from the Census Bureau, the TPC figures on the total number of children who will benefit are generally considered more accurate than the estimates using the March CPS data. Thus, the estimates we compute from the March CPS data were adjusted to match the TPC figures for the total number of children helped. (The TPC data do not provide information about the characteristics of those helped; that information is only available from the detailed information collected by the Census Bureau.)