Build Back Better’s Child Tax Credit Changes Would Protect Millions From Poverty — Permanently

Expanded EITC Extended for Adults Without Children

The House Build Back Better legislation would ensure that families continue to get a significantly expanded Child Tax Credit via monthly payments through 2022; and it would permanently make the full credit available to children in families with low or no earnings in a year, locking in substantial expected reductions in child poverty. The expanded credit benefits roughly 9 in 10 children across the country, and already data show signs of success. The vast majority of parents with low incomes are spending their Child Tax Credit payments on basic needs such as food, housing, utility bills, and education, which can help give their children a stronger start in life.[1]

Build Back Better would also extend through 2022 the American Rescue Plan’s expansion of the Earned Income Tax Credit (EITC) for working adults not raising children, boosting the incomes of over 17 million of these working adults. [2] Previously nearly 5.8 million of them were taxed into, or deeper into, poverty in part because their EITC was too low.

Making the full Child Tax Credit available for families with low or no earnings in a year... is expected to generate historic reductions in child poverty compared to what it would have been otherwise.Making the full Child Tax Credit available for families with low or no earnings in a year, often called making it “fully refundable,” is expected to generate historic reductions in child poverty compared to what it would have been otherwise. Before the Rescue Plan made the full Child Tax Credit fully available in 2021, 27 million children in families with low or no income in a year received less than the full credit or no credit at all.[3] Full refundability ensures that children in these families get the same amount of the Child Tax Credit as children in families with higher incomes.[4] This provision is the main driver of the credit expansion’s child poverty reductions:

  • Altogether Build Back Better’s Child Tax Credit expansions — full refundability and expanding the maximum credit to $3,600 for children under age 6 and $3,000 for children aged 6-17 — are expected to reduce child poverty by more than 40 percent as compared to what it would be without the expansion. Full refundability drives 87 percent of this anti-poverty impact.
  • While policymakers should ensure that the higher credit is made permanent, even if the credit amounts return to their pre-2021 level of $2,000 per child under age 17,[5] making the credit fully available at that level would reduce child poverty by roughly 20 percent.

Build Back Better’s Child Tax Credit expansions — especially permanent full refundability — also represent a significant step toward racial equity: they would permanently eliminate a fundamental design flaw in the credit that had the direct effect of ensuring that disproportionate numbers of Black and Latino children received a partial credit or none at all. Before the Rescue Plan’s expansion, roughly half of Black and Latino children in our country received less than the full Child Tax Credit or no credit at all — compared to roughly 1 in 5 white children — because their families earned too little.[6] Black and Latino families are overrepresented in low-paid work and face worse employment prospects due to historical and ongoing discrimination in education, housing, employment, and criminal justice that have systematically limited opportunity.[7] Build Back Better also would restore eligibility for the credit to children who aren’t eligible for a Social Security number because of their immigration status but can be claimed as tax dependents by using an Individual Tax Identification Number (ITIN).

Full Refundability — the Driver of Child Poverty Reduction — Would Be Permanent

Prior to the Rescue Plan, 27 million children received less than the full Child Tax Credit or no credit at all because their families’ incomes were too low. That included roughly half of all Black and Latino children and half of children who live in rural communities.[8] (See Appendix Table 2 for state-specific estimates, by race and ethnicity.) This upside-down policy gave less help to the children who needed it most. The Rescue Plan temporarily fixed this policy by making the tax credit fully refundable for 2021. Build Back Better, in one of its signature achievements, would make this policy advance permanent.

Figure 1

The Rescue Plan’s Child Tax Credit expansions — and their continuation in Build Back Better — are expected to result in historic reductions in child poverty, with full refundability largely responsible. The Rescue Plan expanded the Child Tax Credit in three ways:

  • It increased the maximum credit to $3,600 per child for children through age 5 and $3,000 for children aged 6 to 17;
  • It allowed families to newly claim their 17-year-old children; and
  • It made the credit fully available to families with children that lacked earnings in a year or had earnings that were too low.

In the absence of the full refundability provision, the first two of those changes would lift an estimated 543,000 children above the poverty line, reducing the child poverty rate by 5 percent.[9] Before the Rescue Plan, most children with incomes below the poverty line received less than the full Child Tax Credit, so raising its maximum amount would have provided them no benefit.

But the two changes plus full refundability stand to raise 4.1 million children above the poverty line (see Appendix Table 1 for state-specific estimates) and cut the child poverty rate by more than 40 percent. (See Figure 1.) In other words, the full refundability feature makes the expansion nearly eight times as effective in reducing child poverty.

Figure 2

The Build Back Better legislation would extend the entire Rescue Plan expansion through 2022, and make full refundability permanent, which would result in a significant reduction in child poverty even if the other aspects of the expansion expire. If the maximum credit amount drops back to $2,000 per child in the coming years and the age range of eligibility for the credit returns to under 17, but full refundability remains permanent, roughly 2 million children would be lifted above the poverty line (as compared to child poverty without the full refundability provision in place). That would reduce child poverty by roughly 20 percent compared to what it would be without the expansion. In future legislation Congress should extend the full Rescue Plan expansion beyond 2022 and, ultimately, make the full expansion permanent.

Figure 3

Making the Child Tax Credit fully refundable is particularly important for reducing racial disparities in child poverty. Expanding only the maximum credit amount to Rescue Plan levels and including 17-year-olds (but not making it fully refundable) would reduce Black and Latino child poverty rates by only about 1 percentage point relative to the poverty rate without those expansions, and so would do little to shrink the significant, long-standing gaps in child poverty between Black and white children and between Latino and white children.

But increasing the credit, adding 17-year-olds, and making it fully refundable would reduce Black and Latino child poverty rates by about 9 percentage points — from 22 percent to 13 percent for Black children, and 21 percent to 12 percent for Latino children — and would reduce the white child poverty rate from 8 percent to 5 percent, relative to the unexpanded credit.[10] (See Figure 2.) As a result, these changes would narrow the Black/white and the Latino/white differences in child poverty rates by 44 and 41 percent, respectively. The full expansion of the Child Tax Credit would also reduce the poverty rate for children identified as American Indian and Alaska Native alone or in combination with other races (regardless of Latino ethnicity) from 18 percent to 10 percent, and for Asian children from 13 percent to 9 percent.

Poverty and the hardships that come with it — unstable housing, frequent moves, inadequate nutrition, and high levels of stress in the family — can take a heavy toll on children and are associated with lower levels of educational attainment, poorer health in adulthood, lower earnings, and higher likelihood of being arrested, a 2019 National Academies of Science, Engineering, and Medicine report on reducing child poverty found. “[T]he weight of the causal evidence indicates that income poverty itself causes negative child outcomes, especially when it begins in early childhood and/or persists throughout a large share of a child’s life,” the report concluded.[11]

Making the credit fully available on a permanent basis to families with low incomes would improve children’s lives in the near and long term and benefit society overall, in important ways. (See Figure 3.) Studies show additional income is linked to better outcomes for children in families with low income, including better educational performance and attainment, higher earnings in adulthood, and better health, which can yield benefits for children and their communities over the course of their lives.[12] Additional income provides greater stability for families, with a corresponding reduction in stress for parents and children. And making the credit fully available would boost the incomes of many families who work hard at important but low-paid jobs, including in many positions recognized as essential to our daily life.

Key Child Tax Credit Changes Extended, Some Groups Newly Eligible

Recall that Build Back Better legislation would extend the Rescue Plan’s increase in the maximum Child Tax Credit from $2,000 to $3,600 for children under age 6 and $3,000 for children aged 6-17 (including 17-year-olds for the first time). And as it does under the Rescue Plan, Build Back Better’s increase in the maximum credit would begin to phase down for unmarried tax filers making more than $112,500 and for married couples making over $150,000.[13]

Also under Build Back Better, families could receive the Child Tax Credit as advance monthly payments of $300 per young child ($250 per older child) for the entirety of 2022, with Congress possibly considering a further extension. (Build Back Better allows 12 months of advance monthly payments while the Rescue Plan allowed families to receive six months of advance monthly payments of $300 per young child or $250 per older child, from July to December 2021, in part because the Rescue Plan was enacted partway through the year, in March 2021.[14]) To understand the game-changing potential of this policy advance, consider the following example:

  • A single mom, with a toddler and a daughter who is a second-grader, works as a home health aide helping an elderly person meet their basic needs; she makes $12,500 working part time around her kids’ schedule. Prior to the Rescue Plan, this family received a Child Tax Credit of $750 per child per year, but they now get $550 per month — a total $3,600 for the toddler and $3,000 for the second-grader in 2021 — and would in 2022 as well if Build Back Better is enacted.

Families with low and moderate incomes are spending their expanded Child Tax Credits on the most basic household expenses — food, clothing, housing, and utilities — or education. Nine in ten families with lower incomes (less than $35,000) spent their Child Tax Credit on at least one of these needs, Census Bureau data show.[15] More families also report having enough to eat since the Child Tax Credit monthly payments began.

Overall, Build Back Better’s Child Tax Credit expansions are expected to benefit more than 65 million children — nearly 90 percent of all children — across the country, including 31.9 million white children, 17.5 million Latino children, 9.4 million Black children, and 2.8 million Asian children.[16] (See Appendix Table 3 for state-specific estimates.) They are also expected to lift 4.1 million children above the poverty line, of whom 1.6 million are Latino, 1.2 million are white, 930,000 are Black, and 132,000 are Asian. Black and Latino children would disproportionately benefit.[17]

Children With Certain Immigration Statuses Would Again Be Eligible

The Build Back Better framework would also restore eligibility for the credit to children who aren’t eligible for a Social Security number (SSN) because of their immigration status but can be claimed as tax dependents by using an Individual Tax Identification Number (ITIN). A provision in the 2017 tax law denied the credit to such children — even though there is generally broad support to grant legal status or take other steps to encourage them to finish their education and equip them for future success in our communities and economy. The country has a stake in ensuring that these children get the resources they need to realize their potential, and Build Back Better would ensure that children with ITINs have access to the same credit as other children.

Child Tax Credit Expansion Would Greatly Benefit U.S. Territories

The Build Back Better legislation would also provide its Child Tax Credit expansions to all the U.S. territories.[18] Child poverty is much higher there, making these expansions sorely needed. To ensure the Child Tax Credit reaches all eligible families, the territories would need support to make people aware of the expansions, given the steep economic challenges, language barriers, and other obstacles to enrollment they face. The territories face economic challenges that have left local government agencies without the necessary funding and staffing to aid outreach efforts.

One-Year Extension of Expanded EITC for Adults Not Raising Children

The EITC is a powerful wage subsidy, but before the Rescue Plan it largely excluded working adults not raising children at home, providing only a tiny credit to a small number of them, and excluding younger and older workers. Build Back Better would extend for 2022 the Rescue Plan’s EITC expansion, which raised both the maximum credit for these workers (from roughly $540 to roughly $1,500) and the income cap for them to qualify (from about $16,000 to at least $22,000). It also expanded the age range of eligible workers without children to include younger adults aged 19-24 (excluding students under 24 who are attending school at least part time), as well as people aged 65 and over.

This expansion would continue to boost the incomes of more than 17 million working adults without children who do important work for low pay. (See Appendix Table 4 for state-specific estimates, by race/ethnicity.) They include nearly 5.8 million people aged 19 to 65 whom the federal tax code would otherwise tax into, or deeper into, poverty — the lone group for whom that happens — in large part because their EITC would otherwise be too low.[19] The shares of such people who are Latino and Black workers are disproportionately high (about 26 percent are Latino and 18 percent are Black, compared to their 19 percent and 12 percent respective shares of the overall population) — again reflecting historical and ongoing barriers to economic opportunity that have led to their overrepresentation in low-paid work.

Among those most likely to benefit are people who work as cashiers, food preparers and servers, and home health aides. (See Table 1.) The pandemic has helped the nation better understand and appreciate these workers and millions of others who work for low pay and the essential role they play in keeping this economy running. Build Back Better would ensure that this income boost will continue in 2022. Congress will need to enact a further extension to ensure this important policy remains in place.

TABLE 1
Working Adults Without Children in Selected Essential Occupations Who Would Benefit From EITC Expansion in Build Back Better Legislation
Relative to without the expansion
Occupation Number of workers who would gain Workers who would gain as a share of all workers aged 19 and older in occupation
Cashiers 1,074,000 33%
Retail salespersons 673,000 20%
Cooks 660,000 30%
Janitors and building cleaners 537,000 21%
Laborers and freight, stock, and material movers, by hand 534,000 24%
Personal and home care aides 468,000 29%
Truck and delivery drivers 412,000 10%
Nursing, psychiatric, and home health aides 385,000 17%
Stock clerks and order fillers 384,000 26%
Food preparation workers 315,000 30%
Child care workers 304,000 24%
First-line supervisors/managers of retail sales workers 253,000 7%
Hand packers and packagers 204,000 32%
Miscellaneous agricultural workers 182,000 19%
Dishwashers 105,000 51%
Bus drivers 71,000 11%
All occupations 17,445,000 11%

Note: Workers without children counted as benefiting from the EITC expansion in the Build Back Better legislation are those aged 19 and older (excluding students under age 24 attending school at least part time).

Source: CBPP estimates based on U.S. Census Bureau’s March 2019 Current Population Survey, using tax year 2021 tax rules and incomes adjusted for inflation to 2021 dollars. Estimates reflect a pre-pandemic economy.

Appendix

APPENDIX TABLE 1
Estimated Number of Children Who Would Benefit From Child Tax Credit Expansion in Build Back Better Legislation, by State
Relative to without the expansion
State Children under 18 lifted above poverty line by expansion Children under 18 who would benefit from expansion Share of children under 18 who would benefit from expansion
Total U.S. 4,120,000 65,560,000 89%
Alabama 76,000 1,020,000 93%
Alaska 11,000 166,000 89%
Arizona 109,000 1,507,000 92%
Arkansas 47,000 661,000 93%
California 582,000 7,844,000 86%
Colorado 56,000 1,106,000 87%
Connecticut 30,000 604,000 81%
Delaware 9,000 181,000 89%
District of Columbia 9,000 93,000 75%
Florida 275,000 3,833,000 91%
Georgia 165,000 2,269,000 90%
Hawai’i 15,000 277,000 91%
Idaho 16,000 410,000 93%
Illinois 150,000 2,536,000 87%
Indiana 78,000 1,452,000 92%
Iowa 24,000 668,000 91%
Kansas 29,000 651,000 92%
Kentucky 66,000 929,000 92%
Louisiana 89,000 1,027,000 92%
Maine 10,000 229,000 90%
Maryland 56,000 1,120,000 83%
Massachusetts 57,000 1,099,000 80%
Michigan 114,000 1,968,000 90%
Minnesota 43,000 1,122,000 87%
Mississippi 55,000 677,000 94%
Missouri 70,000 1,260,000 91%
Montana 10,000 209,000 91%
Nebraska 18,000 434,000 91%
Nevada 38,000 634,000 92%
New Hampshire 8,000 221,000 85%
New Jersey 93,000 1,599,000 81%
New Mexico 32,000 454,000 93%
New York 250,000 3,554,000 86%
North Carolina 135,000 2,085,000 90%
North Dakota 4,000 157,000 91%
Ohio 128,000 2,367,000 91%
Oklahoma 59,000 894,000 93%
Oregon 40,000 778,000 89%
Pennsylvania 137,000 2,363,000 89%
Rhode Island 8,000 185,000 89%
South Carolina 67,000 1,025,000 93%
South Dakota 9,000 196,000 91%
Tennessee 92,000 1,393,000 92%
Texas 489,000 6,686,000 91%
Utah 32,000 859,000 92%
Vermont 4,000 104,000 89%
Virginia 89,000 1,586,000 85%
Washington 66,000 1,433,000 87%
West Virginia 22,000 346,000 93%
Wisconsin 45,000 1,158,000 90%
Wyoming 4,000 128,000 93%

Notes: Estimates reflect a pre-pandemic economy, using tax year 2021 tax rules and incomes adjusted for inflation to 2021 dollars.

Source: CBPP analysis of the March 2019 Current Population Survey (for national total) allocated by state based on CBPP analysis of American Community Survey (ACS) data for 2016-2018. Poverty calculations also use U.S. Census Bureau Supplemental Poverty Measure research files for the ACS.

APPENDIX TABLE 2
Estimated Number of Children Under 17 Left Out of Full $2,000 Child Tax Credit Prior to Rescue Plan, by State and Race/Ethnicity
State Total White Latino Black Asian Another race or multiple races
Total U.S. 27,000,000 8,763,000 9,904,000 5,738,000 813,000 1,782,000
Alabama 480,000 181,000 55,000 220,000 3,000 22,000
Alaska 53,000 15,000 N/A N/A N/A 27,000
Arizona 692,000 153,000 407,000 39,000 8,000 84,000
Arkansas 323,000 157,000 56,000 86,000 N/A 22,000
California 3,524,000 450,000 2,480,000 227,000 221,000 146,000
Colorado 346,000 120,000 176,000 19,000 8,000 22,000
Connecticut 199,000 53,000 92,000 37,000 7,000 10,000
Delaware 67,000 19,000 17,000 26,000 N/A N/A
District of Columbia 53,000 N/A 8,000 43,000 N/A N/A
Florida 1,730,000 466,000 657,000 498,000 26,000 84,000
Georgia 1,044,000 273,000 221,000 473,000 21,000 57,000
Hawai’i 92,000 9,000 19,000 N/A 16,000 47,000
Idaho 153,000 95,000 46,000 N/A N/A 10,000
Illinois 982,000 295,000 352,000 265,000 26,000 44,000
Indiana 558,000 307,000 96,000 107,000 11,000 36,000
Iowa 197,000 120,000 32,000 24,000 5,000 16,000
Kansas 218,000 106,000 65,000 23,000 4,000 20,000
Kentucky 422,000 292,000 38,000 59,000 5,000 27,000
Louisiana 530,000 160,000 41,000 296,000 5,000 28,000
Maine 75,000 62,000 N/A N/A N/A 6,000
Maryland 352,000 82,000 85,000 148,000 13,000 24,000
Massachusetts 356,000 119,000 146,000 50,000 21,000 22,000
Michigan 810,000 406,000 97,000 232,000 16,000 60,000
Minnesota 322,000 133,000 57,000 74,000 23,000 36,000
Mississippi 351,000 103,000 16,000 215,000 N/A 15,000
Missouri 502,000 296,000 46,000 112,000 5,000 43,000
Montana 78,000 51,000 N/A N/A N/A 21,000
Nebraska 141,000 65,000 47,000 13,000 5,000 11,000
Nevada 271,000 53,000 142,000 42,000 10,000 23,000
New Hampshire 52,000 40,000 N/A N/A N/A N/A
New Jersey 561,000 144,000 252,000 122,000 23,000 20,000
New Mexico 245,000 34,000 166,000 3,000 N/A 42,000
New York 1,552,000 471,000 574,000 316,000 123,000 69,000
North Carolina 926,000 300,000 241,000 300,000 18,000 66,000
North Dakota 39,000 20,000 N/A N/A N/A 12,000
Ohio 950,000 512,000 91,000 249,000 11,000 88,000
Oklahoma 398,000 153,000 100,000 51,000 4,000 90,000
Oregon 291,000 146,000 102,000 10,000 8,000 25,000
Pennsylvania 893,000 428,000 192,000 196,000 25,000 54,000
Rhode Island 67,000 22,000 30,000 8,000 N/A N/A
South Carolina 476,000 156,000 66,000 220,000 4,000 30,000
South Dakota 67,000 28,000 6,000 N/A N/A 30,000
Tennessee 635,000 314,000 93,000 188,000 7,000 33,000
Texas 3,086,000 476,000 2,040,000 430,000 60,000 79,000
Utah 233,000 129,000 74,000 N/A 4,000 19,000
Vermont 30,000 26,000 N/A N/A N/A N/A
Virginia 532,000 194,000 102,000 179,000 17,000 39,000
Washington 477,000 191,000 173,000 32,000 20,000 61,000
West Virginia 170,000 145,000 4,000 9,000 N/A N/A
Wisconsin 366,000 171,000 75,000 73,000 13,000 34,000
Wyoming 35,000 22,000 8,000 N/A N/A 4,000

Notes: Figures are rounded to the nearest 1,000 and may not sum to totals. N/A indicates reliable data are not available due to small sample size. Estimates reflect a pre-pandemic economy, using tax year 2021 tax rules and incomes adjusted for inflation to 2021 dollars. Children left out in prior law received less than the full $2,000 per child because their families lacked earnings or had earnings that were too low. Racial and ethnic categories do not overlap; figures for each racial group such as Black, white, or Asian do not include individuals who identify as multiracial or people of Latino ethnicity. Latino includes all people of Hispanic, Latino, or Spanish origin regardless of race. Due to limitations of the Census data, the figures do not reflect IRS rules that require children to have a Social Security number to qualify for the Child Tax Credit. This omission likely has little effect on most of the estimates shown here; the Latino share of children left out, however, may be somewhat overstated.

Source: Tax Policy Center national estimate allocated by state and by race or ethnicity based on CBPP analysis of American Community Survey (ACS) data for 2016-2018.

APPENDIX TABLE 3
Estimated Number of Children Under 18 Who Would Benefit From Child Tax Credit Expansion in Build Back Better Legislation, by State and Race/Ethnicity
Relative to without the expansion
State Total White Latino Black Asian Another race or multiple races
Total U.S. 65,560,000 31,912,000 17,548,000 9,377,000 2,759,000 3,964,000
Alabama 1,020,000 575,000 78,000 316,000 12,000 39,000
Alaska 166,000 78,000 16,000 4,000 9,000 59,000
Arizona 1,507,000 563,000 695,000 69,000 34,000 146,000
Arkansas 661,000 412,000 84,000 120,000 8,000 38,000
California 7,844,000 1,756,000 4,473,000 411,000 771,000 434,000
Colorado 1,106,000 591,000 377,000 48,000 31,000 59,000
Connecticut 604,000 305,000 166,000 77,000 24,000 32,000
Delaware 181,000 88,000 30,000 48,000 6,000 10,000
District of Columbia 93,000 10,000 15,000 63,000 N/A N/A
Florida 3,833,000 1,536,000 1,227,000 790,000 88,000 193,000
Georgia 2,269,000 942,000 348,000 790,000 73,000 115,000
Hawai’i 277,000 36,000 53,000 3,000 66,000 120,000
Idaho 410,000 307,000 77,000 N/A 4,000 19,000
Illinois 2,536,000 1,231,000 682,000 410,000 106,000 107,000
Indiana 1,452,000 1,025,000 166,000 164,000 27,000 71,000
Iowa 668,000 520,000 69,000 31,000 16,000 33,000
Kansas 651,000 427,000 125,000 39,000 15,000 46,000
Kentucky 929,000 726,000 56,000 86,000 14,000 47,000
Louisiana 1,027,000 502,000 70,000 391,000 13,000 50,000
Maine 229,000 202,000 6,000 7,000 N/A 12,000
Maryland 1,120,000 430,000 187,000 373,000 57,000 73,000
Massachusetts 1,099,000 628,000 236,000 109,000 63,000 62,000
Michigan 1,968,000 1,299,000 168,000 329,000 53,000 119,000
Minnesota 1,122,000 760,000 103,000 115,000 62,000 82,000
Mississippi 677,000 323,000 30,000 296,000 6,000 23,000
Missouri 1,260,000 905,000 86,000 172,000 20,000 78,000
Montana 209,000 163,000 12,000 N/A N/A 33,000
Nebraska 434,000 297,000 79,000 23,000 11,000 24,000
Nevada 634,000 213,000 270,000 63,000 35,000 53,000
New Hampshire 221,000 188,000 15,000 4,000 6,000 8,000
New Jersey 1,599,000 683,000 487,000 241,000 123,000 66,000
New Mexico 454,000 102,000 281,000 5,000 5,000 61,000
New York 3,554,000 1,592,000 955,000 582,000 265,000 160,000
North Carolina 2,085,000 1,047,000 354,000 487,000 55,000 142,000
North Dakota 157,000 122,000 8,000 N/A N/A 19,000
Ohio 2,367,000 1,674,000 146,000 355,000 44,000 148,000
Oklahoma 894,000 465,000 157,000 72,000 15,000 185,000
Oregon 778,000 484,000 185,000 17,000 28,000 64,000
Pennsylvania 2,363,000 1,549,000 303,000 320,000 75,000 116,000
Rhode Island 185,000 102,000 50,000 14,000 6,000 12,000
South Carolina 1,025,000 542,000 96,000 319,000 14,000 54,000
South Dakota 196,000 140,000 11,000 6,000 N/A 37,000
Tennessee 1,393,000 893,000 136,000 274,000 23,000 65,000
Texas 6,686,000 1,939,000 3,488,000 803,000 242,000 215,000
Utah 859,000 629,000 156,000 10,000 13,000 50,000
Vermont 104,000 94,000 N/A N/A N/A N/A
Virginia 1,586,000 818,000 230,000 336,000 83,000 119,000
Washington 1,433,000 791,000 332,000 59,000 85,000 165,000
West Virginia 346,000 306,000 8,000 13,000 N/A 17,000
Wisconsin 1,158,000 807,000 143,000 104,000 37,000 67,000
Wyoming 128,000 99,000 19,000 N/A N/A 9,000

Notes: Figures are rounded to the nearest 1,000 and may not sum to totals. N/A indicates reliable data are not available due to small sample size. Estimates reflect a pre-pandemic economy, using tax year 2021 tax rules and incomes adjusted for inflation to 2021 dollars. Racial and ethnic categories do not overlap; figures for each racial group such as Black, white, or Asian do not include individuals who identify as multiracial or people of Latino ethnicity. Latino includes all people of Hispanic, Latino, or Spanish origin regardless of race. Due to limitations of the Census data, the figures do not reflect IRS rules that require children to have a Social Security number to qualify for the Child Tax Credit. This omission likely has little effect on most of the estimates shown here; the Latino share of children benefiting, however, may be somewhat overstated.

Source: CBPP analysis of the U.S. Census Bureau’s March 2019 Current Population Survey (for national total) allocated by state and by race or ethnicity based on CBPP analysis of American Community Survey (ACS) data for 2016-2018.

APPENDIX TABLE 4
Estimated Number of Working Adults Without Children Who Would Benefit From EITC Expansion in Build Back Better Legislation, by State and Race/Ethnicity
Relative to without the expansion
State Total White Latino Black Asian Another race or multiple races
Total U.S. 17,445,400 9,658,700 3,639,600 2,739,300 815,700 592,100
Alabama 274,300 157,100 15,200 92,000 4,000 6,000
Alaska 38,900 20,400 N/A N/A 3,100 10,500
Arizona 385,200 196,800 130,900 22,700 10,800 24,000
Arkansas 173,700 118,500 12,800 34,200 2,800 5,300
California 2,070,100 668,800 941,300 138,100 247,600 74,300
Colorado 293,300 197,700 61,600 15,200 8,900 10,000
Connecticut 160,900 88,700 37,100 23,800 6,100 5,300
Delaware 46,500 25,500 4,600 13,200 1,500 1,700
District of Columbia 33,200 9,100 4,500 17,300 N/A N/A
Florida 1,323,000 629,200 401,300 232,400 30,500 29,700
Georgia 569,900 261,700 62,700 214,600 18,600 12,300
Hawai’i 71,700 17,100 7,300 N/A 24,100 21,700
Idaho 104,300 86,200 13,100 N/A N/A 3,500
Illinois 620,700 353,100 113,500 113,100 28,800 12,300
Indiana 367,100 273,700 27,100 47,900 8,000 10,500
Iowa 171,400 146,200 9,000 9,400 3,100 3,600
Kansas 163,700 118,900 20,100 15,700 2,900 6,100
Kentucky 256,000 205,600 11,200 30,600 2,900 5,700
Louisiana 281,900 137,600 17,800 115,900 4,900 5,700
Maine 85,300 79,400 N/A N/A N/A 2,400
Maryland 263,300 115,400 36,600 87,600 16,200 7,400
Massachusetts 299,500 197,200 46,500 26,800 19,500 9,500
Michigan 571,000 407,600 33,300 98,900 13,700 17,700
Minnesota 276,300 210,800 17,900 23,100 11,700 12,800
Mississippi 166,500 79,600 6,500 76,400 1,900 2,200
Missouri 338,800 257,400 15,800 50,500 6,500 8,600
Montana 77,900 67,800 2,600 N/A N/A 6,100
Nebraska 101,000 75,900 11,900 7,300 N/A 3,600
Nevada 175,300 78,100 53,500 20,100 14,400 9,100
New Hampshire 66,400 59,900 N/A N/A N/A N/A
New Jersey 388,400 168,600 116,700 69,300 25,200 8,700
New Mexico 132,000 48,500 64,100 4,300 1,800 13,300
New York 982,700 463,500 235,500 158,900 98,100 26,600
North Carolina 593,900 334,300 63,800 161,200 13,800 20,700
North Dakota 39,300 29,100 2,900 N/A N/A 3,300
Ohio 651,600 473,900 27,500 119,200 13,000 17,900
Oklahoma 229,200 141,900 26,500 25,100 3,700 32,000
Oregon 255,300 191,100 35,700 6,200 9,900 12,300
Pennsylvania 662,700 475,200 59,000 93,700 21,200 13,500
Rhode Island 47,600 32,300 9,300 2,500 N/A N/A
South Carolina 303,300 164,800 21,600 104,600 4,800 7,400
South Dakota 49,800 37,500 N/A N/A N/A 8,200
Tennessee 381,400 262,100 25,100 80,500 6,300 7,400
Texas 1,505,300 532,800 674,800 212,800 55,100 29,700
Utah 142,300 103,600 26,100 N/A 4,700 5,800
Vermont 37,200 34,000 N/A N/A N/A N/A
Virginia 415,700 230,000 46,600 105,000 20,900 13,300
Washington 358,300 233,300 54,600 19,500 24,800 26,100
West Virginia 102,900 90,200 2,700 7,300 N/A 1,700
Wisconsin 303,700 240,700 18,500 28,300 6,600 9,600
Wyoming 35,500 30,400 2,900 N/A N/A 1,700

Note: Figures are rounded to the nearest 100 and may not sum to totals. N/A indicates reliable data are not available due to small sample size. Estimates reflect a pre-pandemic economy, using tax year 2021 tax rules and incomes adjusted for inflation to 2021 dollars. Workers without children counted as benefiting from the EITC expansion in the Build Back Better legislation are those aged 19 and older (excluding students under age 24 attending school at least part time). Racial and ethnic categories do not overlap; figures for each racial group such as Black, white, or Asian do not include individuals who identify as multiracial or people of Latino ethnicity. Latino includes all people of Hispanic, Latino, or Spanish origin regardless of race. Due to limitations of the Census data, the figures do not reflect IRS rules that require all EITC family members to have a Social Security number. This omission likely has little effect on most of the estimates shown here; the Latino share of those benefiting, however, may be somewhat overstated.

Source: CBPP analysis of the March 2019 Current Population Survey (for national total) allocated by state and by race or ethnicity based on CBPP analysis of American Community Survey (ACS) data for 2016-2018.

End Notes

[1] Claire Zippel, “9 in 10 Families with Low Incomes Are Using Child Tax Credits to Pay for Necessities, Education,” CBPP, October 21, 2021, https://www.cbpp.org/blog/9-in-10-families-with-low-incomes-are-using-child-tax-credits-to-pay-for-necessities-education.

[2] The American Rescue Plan is Public Law 117-2.

[3] Chuck Marr et al., “Congress Should Adopt American Families Plan’s Permanent Expansions of Child Tax Credit and EITC, Make Additional Provisions Permanent,” CBPP, May 24, 2021, https://www.cbpp.org/research/federal-tax/congress-should-adopt-american-families-plans-permanent-expansions-of-child.

[4] Making the credit fully refundable eliminates the previous earnings threshold, phase-in structure, and cap on the refundable amount.

[5] Prior to the Rescue Plan, the maximum Child Tax Credit was $2,000 per child and was available to children under age 17. Under Build Back Better, the credit would return to this maximum amount, and families would not be able to claim 17-year-olds for the credit, for tax years 2023 through 2025.

[6] Sophie Collyer, David Harris, and Christopher Wimer, “Left behind: The one-third of children in families who earn too little to get the full Child Tax Credit,” Center on Poverty & Social Policy at Columbia University, May 14, 2019, https://www.povertycenter.columbia.edu/news-internal/leftoutofctc.

[7] Danilo Trisi and Matt Saenz, “Economic Security Programs Reduce Overall Poverty, Racial and Ethnic Inequities,” CBPP, January 28, 2021, https://www.cbpp.org/research/poverty-and-inequality/economic-security-programs-reduce-overall-poverty-racial-and-ethnic. Even in the relatively strong pre-pandemic economy, 1 in 3 Black (33 percent) and Latino (34 percent) workers earned below-poverty wages, as did nearly 1 in 5 white workers (19 percent). Economic Policy Institute, State of Working America Data Library, “Poverty-level wages,” 2019, https://www.epi.org/data/#?subject=povwage.

[8] Marr et al., op. cit.

[9] Chuck Marr, Kris Cox, and Arloc Sherman, “Recovery Package Should Permanently Include Families With Low Incomes in Full Child Tax Credit,” CBPP, September 7, 2021, https://www.cbpp.org/research/federal-tax/recovery-package-should-permanently-include-families-with-low-incomes-in-full. The poverty reduction estimates in this report come from policy simulations — that is, calculating after-tax income for a representative sample of families in Census data under different Child Tax Credit scenarios, with and without expansion provisions. This may not equal the reduction in poverty that will be observed between one year and another, which will be influenced by additional factors such as the economy and the expiration of other relief measures.

[10] Danilo Trisi et al., “House Build Back Better Legislation Advances Racial Equity,” CBPP, September 27, 2021, https://www.cbpp.org/research/poverty-and-inequality/house-build-back-better-legislation-advances-racial-equity.

[11] National Academies of Science, Engineering and Medicine, “A Roadmap to Reducing Child Poverty,” 2019, https://www.nap.edu/catalog/25246/a-roadmap-to-reducing-child-poverty.

[12] Arloc Sherman et al., “Recovery Proposals Adopt Proven Approaches to Reducing Poverty, Increasing Social Mobility,” CBPP, August 5, 2021, https://www.cbpp.org/research/poverty-and-inequality/recovery-proposals-adopt-proven-approaches-to-reducing-poverty.

[13] For tax year 2022, as with 2021, the credit would phase down in two steps. First, the credit increase would start to phase down at $112,500 for heads of household ($150,000 for married couples). Second, the final $2,000 of the credit would start to phase down at $200,000 ($400,000 if married). A couple with two children and income between $400,000 and $440,000 would receive a partial credit.

[14] Build Back Better allows families to receive advance monthly payments if their income is below $112,500 for a head of household, or $150,000 for a married couple, and families with higher incomes will claim their Child Tax Credit at tax time. The Rescue Plan allowed any family eligible for the Child Tax Credit to receive monthly payments, including those with higher incomes.

[15] Zippel, op. cit.

[16] Among the 1.6 million U.S. children identified in Census Bureau data as American Indian or Alaska Native (AIAN), either alone or in combination with other races and ethnicities, an estimated 1.5 million would benefit from this Child Tax Credit expansion. (If we apply the non-overlapping race-ethnic categories this report uses for other groups, 555,000 children are considered AIAN alone, not Latino; about 524,000 of them would benefit from this expansion.)

CBPP analysis of the U.S. Census Bureau’s March 2019 Current Population Survey (for national total) allocated by race or ethnicity based on CBPP analysis of American Community Survey (ACS) data for 2016-2018, using 2021 tax parameters and incomes adjusted for inflation to 2021 dollars.

[17] The credit would lift above the poverty line an estimated 9.4 percent of Black children, 8.5 percent of Latino children, and 3.3 percent of white children.

[18] For families in Puerto Rico, monthly payments will be available from July to December 2022.

[19] Marr et al., op. cit.