5 Million Children in Veteran and Active-Duty Families Will Lose Out if Child Tax Credit Expansions End

Some 5 million children with veteran or active-duty parents are eligible for a new or bigger Child Tax Credit this year thanks to the American Rescue Plan’s expansions of the credit, but they — along with tens of millions of other children — will lose out after this year unless Congress extends those Rescue Plan provisions.  Some 5 million children with veteran or active-duty parents will lose out after this year unless Congress extends the American Rescue Plan's expansion of the Child Tax Credit.The stakes are especially high for the 1 million children in veteran and active-duty families who previously received only a partial credit or none at all because their incomes were too low or they lacked earnings in the year; the full Child Tax Credit, or a portion of the credit, will be taken away from them unless Congress extends the Rescue Plan provision making the full credit available to families with the lowest incomes. (See tables 1 and 2 for state-by-state data.)

The Rescue Plan temporarily expanded the Child Tax Credit in three ways. First, it increased the maximum credit from $2,000 per child to $3,600 for children under age 6 and $3,000 for older children. This increase begins phasing out for married couples with incomes above $150,000 and heads of households with incomes above $112,500. Second, it made 17-year-olds eligible for the credit for the first time. Third, it enabled children in families with low or no earnings in the year to receive the full value of the credit for the first time (sometimes called making the credit “fully refundable”), ensuring that the children who need it most — including the 1 million children in these veteran and active-duty families — would benefit.

The expanded Child Tax Credit is now being distributed monthly to families across the country. Because of the expansion, about 2.6 million veteran or active-duty families with 5 million children are either newly eligible for the credit or eligible for a larger credit.

Legislation approved by the House Ways and Means Committee on September 15, part of the “Build Back Better” economic recovery package, would extend the Rescue Plan’s maximum $3,600 per child under age 6 and $3,000 per child ages 6-17 through 2025. Critically, the legislation would also make the “full refundability” feature permanent. This would ensure that the full Child Tax Credit (regardless of the credit’s maximum value in a given year) is not taken away from the 1 million children in military and veteran families with low incomes — or from other children facing difficult economic circumstances.

Consider a recent veteran who works in a warehouse earning $27,000 a year, whose spouse stays home to care for their 5-year-old son and 9-year-old daughter. This family now receives a monthly Child Tax Credit of $550. Under the House bill they would continue to receive this amount through 2025, indexed for inflation. But if Congress fails to act and the Child Tax Credit reverts to its pre-Rescue Plan rules, they would have more than half of their monthly credit taken away, for an annual income loss of $3,600 (also adjusted for inflation).

The tables below provide state-by-state breakdowns of the number of veteran and active-duty families and children who will see their Child Tax Credit decrease if the current expansion is not extended, as well as the number of children in veteran and active-duty families who were denied the full Child Tax Credit before the Rescue Plan because their incomes were too low.

TABLE 1
Veteran or Active-Duty Families and Children Under 18 Who Would See Their Child Tax Credit Decrease if Current Expansion Not Extended, by State
Relative to before American Rescue Plan’s temporary expansion
State Estimated Number of Families Estimated Number of Children
Total U.S. 2,613,000 5,004,000
Alabama 48,000 93,000
Alaska 17,000 35,000
Arizona 64,000 129,000
Arkansas 30,000 54,000
California 213,000 414,000
Colorado 62,000 116,000
Connecticut 19,000 33,000
Delaware 8,000 14,000
District of Columbia 2,000 4,000
Florida 165,000 322,000
Georgia 108,000 211,000
Hawaii 28,000 53,000
Idaho 17,000 35,000
Illinois 74,000 141,000
Indiana 54,000 101,000
Iowa 24,000 45,000
Kansas 34,000 65,000
Kentucky 44,000 83,000
Louisiana 39,000 76,000
Maine 11,000 21,000
Maryland 56,000 107,000
Massachusetts 31,000 57,000
Michigan 61,000 113,000
Minnesota 34,000 66,000
Mississippi 29,000 52,000
Missouri 55,000 103,000
Montana 12,000 24,000
Nebraska 19,000 38,000
Nevada 26,000 51,000
New Hampshire 11,000 21,000
New Jersey 33,000 59,000
New Mexico 21,000 39,000
New York 76,000 139,000
North Carolina 122,000 231,000
North Dakota 8,000 17,000
Ohio 92,000 169,000
Oklahoma 43,000 84,000
Oregon 33,000 62,000
Pennsylvania 81,000 146,000
Rhode Island 5,000 11,000
South Carolina 53,000 102,000
South Dakota 8,000 17,000
Tennessee 71,000 132,000
Texas 261,000 520,000
Utah 23,000 49,000
Vermont 3,000 6,000
Virginia 133,000 257,000
Washington 89,000 168,000
West Virginia 17,000 32,000
Wisconsin 38,000 73,000
Wyoming 8,000 15,000

Notes: Figures are rounded to the nearest 1,000 and may not sum to totals due to rounding. Based on economy as of 2016-2018 using tax year 2021 tax rules and incomes adjusted for inflation to 2021 dollars.

Source: CBPP analysis of the March 2019 Current Population Survey (national estimate) allocated by state based on CBPP analysis of American Community Survey data for 2016-2018.

TABLE 2
Children Under 17 in Veteran or Active-Duty Families Left Out of Full $2,000 Child Tax Credit Prior to American Rescue Plan, by State
State Estimated number of children
Total U.S. 1,044,000
Alabama 24,000
Alaska 6,000
Arizona 31,000
Arkansas 17,000
California 85,000
Colorado 19,000
Connecticut 6,000
Delaware 3,000
District of Columbia N/A
Florida 74,000
Georgia 50,000
Hawaii 11,000
Idaho 8,000
Illinois 26,000
Indiana 21,000
Iowa 7,000
Kansas 14,000
Kentucky 22,000
Louisiana 23,000
Maine 4,000
Maryland 13,000
Massachusetts 9,000
Michigan 24,000
Minnesota 11,000
Mississippi 13,000
Missouri 26,000
Montana 6,000
Nebraska 5,000
Nevada 8,000
New Hampshire N/A
New Jersey 10,000
New Mexico 11,000
New York 29,000
North Carolina 51,000
North Dakota N/A
Ohio 37,000
Oklahoma 19,000
Oregon 14,000
Pennsylvania 27,000
Rhode Island N/A
South Carolina 25,000
South Dakota 3,000
Tennessee 31,000
Texas 112,000
Utah 11,000
Vermont N/A
Virginia 34,000
Washington 28,000
West Virginia 10,000
Wisconsin 13,000
Wyoming 3,000

Notes: Figures are rounded to the nearest 1,000 and may not sum to total due to rounding. N/A indicates reliable data are not available due to small sample size. Based on economy as of 2016-2018 using tax year 2021 tax rules and incomes adjusted for inflation to 2021 dollars.

Source: Tax Policy Center national estimate allocated by state based on CBPP analysis of American Community Survey data for 2016-2018