The EITC and the CTC Give Temporary Income Boost to Low-Income Families

The tax filing season is an important one for families. Refundable credits provide meaningful boosts to family income for those who receive them. The provision of two refundable tax credits (the Earned Income Tax Credit and the Child Tax Credit) to millions of families across the United States contributed to a decline in the monthly poverty rate in March 2022. We find that the overall monthly poverty rate fell from 14.4% in February 2022 to 10.8% in March 2022. For children, the monthly poverty rate fell from 16.7% in February 2022 to 9.9% in March 2022.

The provision of these credits resulted in a substantial, but temporary, dip in monthly poverty rates across population groups, as these credits are a one-time lump sum payment and more families receive their tax refunds in March relative to April. Following the conclusion of tax season, it is likely that monthly child poverty rates could be persistently high through the rest of 2022 absent the continuation of an expanded Child Tax Credit, further policy interventions, or strong improvements in the labor market.