As Congress is hard at work trying to keep the government from shutting down, they’ve also made progress on some critical legislation for families and children with a bipartisan tax package that expands the current Child Tax Credit. While this deal does not include what we see as the essential elements the Child Tax Credit needs to make it an ideal tool to cut child poverty in half, it improves upon the Child Tax Credit and will reportedly lift 400,000 kids out of poverty.   

We know we can make a big impact with an expanded Child Tax Credit. Looking back, we made incredible headway in cutting child poverty with refundability, advanced monthly payments and an increased credit amount included in the 2021 American Rescue Plan. Before the expansion, nearly half of all Black and Latino children were excluded from the full benefit because their families did not owe enough federal income tax to qualify. The expanded Child Tax Credit successfully targeted Black, indigenous, and people of color (BIPOC) households, including 716,000 Black children and 1.2 million Hispanic/Latino children that were moved out of poverty. It was a major achievement benefiting millions of children and their families, but it was only temporary.   

Once the Child Tax Credit was cut back, child poverty rose, and millions of kids fell back into poverty. Studies show that three million fewer children would have been in poverty in 2022 if the Child Tax Credit expansion had continued. Our partners at Center on Poverty and Social Policy at Columbia University have shown that when the Child Tax Credit expansion expired, the proportion of children in poverty more than doubled from 5.2 percent to 12.4 percent. To put it plainly, more kids were in poverty when the Child Tax Credit was cut.  

The expanded Child Tax Credit successfully targeted Black, indigenous, and people of color (BIPOC) households, including 716,000 Black children and 1.2 million Hispanic/Latino children that were moved out of poverty.

These expansions were not just good for children and their families. Expanding the Child Tax Credit gives the nation’s economy a boost as well. Each dollar invested in the Child Tax Credit produces up to $1.50 in local economic spending and $8 in economy-wide return on investment.   

We know that work requirements and means testing are not helpful to families. Simply expanding the Child Tax Credit can help parents and guardians get back to work—providing funds for transportation, childcare, and other costly necessities. 

And let’s be clear, the Child Tax Credit expansion was not perfect in 2021. Tax credits should not exclude families based on which tax identification number they use to file their taxes.  

We’re now precariously close to January 29, 2024—the beginning of the tax season. This is the moment that families can use their tax refunds, including critical tax credits like the Child Tax Credit, to set aside money for emergencies, paying back debts, and getting up to date with utility bills. Rising costs and inflation disproportionally harm households with low incomes. A tax package that includes an expanded Child Tax Credit—retroactively going back to 2023—could make a HUGE difference in the lives of families and our economy. Especially if it includes 80% of the 19 million kids left out of eligibility for the current, full Child Tax Credit. 

Congress should pass legislation that improves a policy that works for children and families all over the United States. We know we still have more work cut out for us, but the current bipartisan tax agreement will help millions of families. Let’s not let our goal of a perfectly expanded Child Tax Credit get in the way of progress for children and their families. Congress should pass this new package as a first step to cutting child poverty once again.  

Joanna Ain is an Associate Director of Policy at Prosperity Now, advocating for policies that create a more equitable tax system and help families build wealth.