The 2021 Child Tax Credit Expansion: Child Poverty Reduction and the Children Formerly Left Behind
In September of 2022, the United States Census Bureau released its poverty statistics for 2021. Results showed a remarkable decline in child poverty, to 5.2%, largely driven by the expansion of the Child Tax Credit put in place under the American Rescue Plan (ARP). In this policy brief, we investigate how well the expanded Child Tax Credit did in reducing child poverty relative to prior law. To do this, we simulate the pre-ARP version of the Child Tax Credit in 2021 data and compare the child poverty reduction we actually saw in 2021 to the child poverty reduction we “would have seen” absent the expansion. Particularly relevant to this question is a group of children we have previously referred to as the “left behind.”
Our previous work showed that the Child Tax Credit left about a third of children behind, as indicated by those children not receiving the full $2,000 per child. The prior law was more likely to leave behind children who were Black or Latino, lived in rural areas, were members of large families or families with a young child, or raised by a single parent. In 2021, the American Rescue Plan made all of these children fully eligible for the expanded Child Tax Credit, so in addition to looking at the effect of the expansion alone, we also consider how children in these groups fared under the expansion relative to prior law.
Key Findings
In 2021, child poverty rates fell to the lowest level on record under the Supplemental Poverty Measure, largely due to the expanded Child Tax Credit, which by itself cut child poverty by 43 percent. This drop was driven in part by the inclusion of the children previously “left behind” from receiving the full credit under prior law.
Children in groups that were disproportionately left behind—Black and Latino children, children in single-parent families, rural families, children in larger families, and families with young children—all showed large declines in child poverty, in many cases closing gaps between them and groups previously less likely to be left behind.
The expanded Child Tax Credit’s supplemental bonus of $600 per young child per year augmented the poverty reduction for this group, helping equalize child poverty rates between younger and older children.
Suggested Citation
Wimer, Christopher, Sophie Collyer, David Harris, and Jiwan Lee. 2022. “The 2021 Child Tax Credit expansion: child poverty reduction and the children formerly left behind.” Poverty and Social Policy Brief, vol. 6 no. 8. Center on Poverty and Social Policy, Columbia University.
Access at: https://www.povertycenter.columbia.edu/publication/2021-child-poverty-reduction