19 Million Children Are Losing Out on the Boosted Child Tax Credit This Year

Many families do not receive the help they need and deserve.

Most important points

• The child tax credit received a significant boost in 2021, and that boost resulted in greater suitability.
• Now many low-income families do not receive money from the credit.

When the US bailout was signed into law in March 2021, it did much more than just a round of stimulus checks. It also increased the child tax credit.

Typically, the child tax credit is up to $2,000 per child, and only a portion of that is refunded. Last year, the maximum value of the child tax credit increased to $3,000 for children ages 6 to 17 and $3,600 for children ages 6 and under. The credit has also been changed to fully refundable, so households with a $0 tax debt can still claim the credit in full.

Last year’s increased child tax credit was also partly paid in monthly installments that were paid into the bank accounts between July and December. This allowed many households to keep up with their bills as inflation began to pick up.

But an overlooked aspect of last year’s increase in child tax credits is that more recipients than usual were able to receive the credit. And with last year’s boost off the table, an estimated 19 million children who qualified for the Child Tax Credit in 2021 will no longer be eligible today, according to the Center for Budget and Policy Priorities.

That is problematic. The reason? It is low-income families who are now excluded from credit, and they are undoubtedly the ones who need it most.

A hard blow to low-income households

Millions of children will miss out on the child tax credit this year because their family income is too low to qualify for the tax credit, or to fully qualify for the tax credit. The Center for Budget and Policy Priorities explains that credit stages are largely based on income, more than any other factor. So a low-income family often gets the same total credit, whether they have one, two or more children in their household.

In contrast, higher-income households usually receive their full $2,000 per child, regardless of how many children they have. That’s because these families are more likely to have some kind of tax liability. And while the child discount is only partially refunded this year, because of that tax liability, they can still get the full value of the discount.

Changes are in order

The enhanced child tax credit helped lift millions of children out of poverty by 2021. It also helped to reduce food insufficiency among children.

Because the enhanced credit brought so many positive changes, lawmakers are still vying to introduce an improved version. It may not be the same version that families saw in 2021, but it could be a more generous version than what households with children qualify for today.

However, the big question will be how low-income families factor into eligibility. Some legislators still insist that there must be a minimum income requirement to collect the credit, or collect it in full. That’s something that needs to be worked out in order to move forward with plans to bring back the enhanced child tax credit.