A child tax credit is quickly emerging as a major family-friendly issue and a possible bipartisan point of agreement in this year’s presidential campaign, touted by both Vice President Kamala Harris and Republican vice presidential nominee JD Vance.
During a speech Friday in the battleground state of North Carolina, Harris proposed restoring the popular pandemic-era child tax credit of up to $3,600, and offering an additional $6,000 credit to families with newborn babies.
“That is a vital, vital year of critical development of a child, and the cost can really add up, especially for young parents who need to buy diapers and clothes and a car seat and so much else, and we will do this while reducing the deficit,” Harris said.
And in an appearance on CBS’ “Face the Nation” last Sunday, Vance said he supported an increase to the child tax credit.
“Look, I’d love to see a child tax credit that’s $5,000 per child,” he said. “But you, of course, have to work with Congress to see how possible and viable that is.”
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What is the child tax credit?
The child tax credit was first enacted in 1997 as a way to give middle- and upper-income families an extra $500 nonrefundable tax credit per year for each of their children. The credit has been expanded several times under both Republican and Democratic administrations.
In 2017, President Trump signed into law an increase that raised the credit up to a maximum of $2,000 per child. The lowest-income families received a smaller credit than middle-class families — currently, up to $1,600 per child.
Then in 2021, during the height of the pandemic, President Biden signed into law a temporary, fully refundable increase that expanded the child tax credit to $3,600 per child under 6, and $3,000 for older children. This expansion allowed all families — even those earning the lowest incomes — to receive the full amount and have it deposited in monthly allotments directly into their bank accounts. The one-year expansion cost an additional $105 billion.
A historic drop in child poverty
This regular, monthly payment of $250 to $300 each month was a “game-changer” for families, said Christy Felling, director of communications for the nonprofit First Five Years Fund. “That’s really what had a dramatic impact on child poverty.”
The policy had an immediate and enormous impact. In 2021, the child poverty rate dropped by nearly half compared with the year before, from 9.7% down to 5.2% — a historic low.
“We know this works and has a direct impact on so many issues, including child poverty,” Harris said Friday.
Elyssa Schmier, a vice president at the advocacy group MomsRising, described the credit as “life-changing for a lot of people” and “wildly popular.”
Research has found that families spent the money on food and housing, as well as children’s clothing, books and toys. Some stay-at-home parents were able to afford the child care they needed to return to work. The biggest impacts were seen felt Black and Latino families, said Christopher Wimer, director of the Center on Poverty and Social Policy at Columbia University. “Its hard for me to pinpoint another policy that would be as effective at lifting kids out of poverty,” he said.
But when the expansion of the child tax credit expired at the end of the year, Congress did not extend it, and the child poverty rate skyrocketed to 12.4% — even higher than pre-pandemic levels.
At least 15 states, including California, have child tax credits of their own, in addition to the federal credit. Gov. Tim Walz of Minnesota, Harris’s running mate, signed into law a credit of $1,750 per eligible child, among the most generous state policies.
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Where does the child tax credit stand today?
The current child tax credit of up to $2,000 per child is set to expire in 2025. Because it is not fully refundable, 24 million low-income children receive a smaller credit than middle-class families.
Legislation to increase the credit again has recently garnered bipartisan support in Congress. In January, the House passed a smaller version of an expansion, but the legislation ran up against Republican opposition in the Senate earlier this month and failed. Despite his stated support for an expanded child tax credit, Vance did not show up for the vote.
“It’s really, really hard to get legislation passed right now. It got swept up into the chaos,” said Felling, of The First 5 Years Fund.
So far, Trump has not mentioned the child tax credit during his speeches and rallies.
Harris’ focus on raising the child tax credit is among her first economic policy proposals of the campaign — and has advocates optimistic about another expansion.
“There are so many hot-button issues facing the United States right now, that just to get the spotlight and attention on child-related issues from both sides is half the battle,” said Felling.
Wimer said Harris’ proposal to provide an extra $6,000 to infants in the first year of life was particularly exciting.
“Our research that the birth of a child is quite often like a poverty-inducing event,” he said.
All of the costs of a newborn — including a crib, diapers, formula — add up quickly and can cause real economic stress for a struggling new family. An influx of money during one of the most developmentally sensitive moments of a child’s life has the potential to make a real difference, he said.
This article is part of The Times’ early childhood education initiative, focusing on the learning and development of California children from birth to age 5. For more information about the initiative and its philanthropic funders, go to latimes.com/earlyed.