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Biden’s child tax credits could cut child poverty by 45%

Older students carry their lunches to their classrooms to eat, leaving the lunchroom free for younger students to keep a social distance during in-person learning at Ackerman Elementary school in the small town of Ackerman, Mississippi, U.S.
Reuters/Jonathan Ernst
The Biden administration is giving parents up to $3,600 per child.
  • Ana Campoy
By Ana Campoy

Deputy editor, global finance and economics

Published

American parents are slated to receive more pandemic-related aid starting July 15, when Joe Biden’s administration will start distributing cash to families with joint income of less than $400,000 or individual income below $200,000.

The money, which is part of the stimulus package passed in March, is technically a tax credit for the 2021 tax year. But by sending out checks in advance, rather than a tax refund paid as a lump sum in 2022, the extra money should ease family finances in real-time and potentially lift millions of children above the poverty line.

The expanded child tax credit’s effect on child poverty

According to one estimate, from the Center on Poverty and Social Policy at Columbia University, the tax credits could cut the overall child poverty rate by 45%. The reduction would be sharper for certain minority groups.

The extra help is only for one year, so lower poverty rates could be short-lived. Biden has proposed keeping the credits at current levels—up to $3,600 for children below 6 years old—through 2025, while some Democrats in Congress want to make the benefit permanent. If that were to happen, it would represent a big shift in how the government views childcare, seeing it more as a reimbursable service necessary to keep the economy churning and less as free labor provided by family.

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