An expanded and inclusive Child Tax Credit would cut child poverty by 45%: a national and state-by-state analysis

This fact sheet analyses the poverty reduction potential of the proposed American Family Act. The American Family Act would make the full benefit available to families with the lowest incomes and increase the maximum Child Tax Credit available to families with eligible children: families with children under age 6 can receive up to $3600 per young child each year and families with children aged 6 to 17 can receive up to $3000 per older child each year. This proposal informed the Child Tax Credit policy changes enacted for 2021 under the American Rescue Plan signed into law in March 2021. This fact sheet provides poverty estimates by children's age, race and ethnicity, family characteristics. It provides estimates for children in poverty (below 100% of the Supplemental Poverty Measure threshold), deep poverty (below 50% of the Supplemental Poverty Measure threshold), and in families with low income (below 200% of the Supplemental Poverty Measure threshold). State level results are included.

Our supplementary table estimates the anti-poverty impacts of the American Family Act relative to the child poverty rate before and after accounting for the Child Tax Credit under current law. Impacts are shown for all children under age 18 and by children's race and ethnicity.

In our 2019 original analysis of the American Family Act, we find these proposed reforms to the Child Tax Credit could move 4 million children out of poverty and cut deep poverty among children in half. This policy change presents an opportunity to transform the credit into one that works for all children, not just those whose parents earn enough to qualify. Under an alternative scenario—if the credit values of the Child Tax Credit were to increase, but with the credit still tied to earnings—this impact would be greatly reduced and children with the fewest resources would again be left out.