Making the Expanded Child
Tax Credit Permanent
and Fully Refundable

One of the most beneficial tax credits in our complex tax code is the Child Tax Credit. The Child Tax Credit helps offset tax liability for parents to address economic challenges that burden working families. Despite Congress’s enactment of the original Child Tax Credit into law in the 1990s, the wealth gap between Black Americans and their white counterparts has widened significantly over the last 30 years.

45% of Black children in America were excluded from the full benefits of the Child Tax Credit before its temporary expansion – compared to only 20% of white children.

When Congress enacted the Child Tax Credit into law in 1997, it codified specific economic criteria that determined eligibility for the tax credit. These criteria excluded 50% of Black children from receiving the full benefits of the policy.

Making the expanded Child Tax Credit permanently fully refundable and available through periodic payments can potentially eradicate child poverty in America over time.

The expanded Child Tax Credit has lifted 3.6 million children above the poverty line in less than a year. If made permanent, we could reduce the child poverty rate by more than 40%. Right now, parents can receive up to $3,600 per child. That’s nearly $300 a month in added support, and enough to help parents cover the cost of child care and other expenses related to childrearing.

The expanded Child Tax Credit helps keep parents employed by helping them pay for child care.

Recent studies suggest that the additional income provided by an expanded Child Tax Credit is helpful but not enough to dissuade parents from seeking traditional employment. According to a new study by Humanity Forward, 94 percent of Child Tax Credit recipients said they planned to continue working or even pursue overtime opportunities since they would be able to afford child care and other child-rearing expenses.

Making the expanded Child Tax Credit permanent would generate $800 billion in benefits to society while only costing about $100 billion.

By making it permanently fully refundable at current levels and available through periodic payments – $3,600 per child for children under 5 and $3,000 per child for children between 6-17 – the Child Tax Credit would generate an increase of $76 billion in children’s future earnings in adulthood and nearly $536 billion in increased benefits caused by children’s improved health outcomes.