Survey: The end of expanded Child Tax Credit payments led to financial stress for many
When expanded Child Tax Credit (CTC) payments ended in December 2021, many families had a harder time paying bills and putting food on the table, and their levels of financial stress increased. That’s one of many findings of a recently released survey of more than 1,000 households that received in the benefits in the continental U.S., and another 500 households in Puerto Rico.
Groups participating in the survey, which was conducted in July 2022 and released in early August 2023, included the Center for Law and Social Policy (CLASP), the Center for the Study of Social Policy, the University of California – Berkeley, Children’s Defense Fund, National Women’s Law Center, Ideas, Unidos US, and the Tax Policy Center.
Congress expanded the CTC as part of the American Rescue Plan in early 2021. Monthly payments of $300 to families per child under age 6 and $250 per child ages 6 to 17 began in July 2021 and continued through December of that year. Families generally received a lump sum payment for the first six months of 2021 when they filed their taxes in early 2022. Unlike previous law, under the temporary expansion the CTC was fully refundable, meaning it was available to families with no reported earnings or federal income tax liability. This provision is key for ensuring that the CTC reaches 19 million children in the lowest income families otherwise left out of the full CTC – and securing dramatic decreases in child poverty.
The July 2022 survey found that 60 percent of parents who received the monthly payments said it was more difficult for their family to meet their expenses once the monthly payments ended. Among these parents, about two-thirds said they had trouble covering basic expenses, including food and groceries (66 percent) and paying the bills (65 percent). Parents also reported that they found it difficult to meet other expenses – such as buying clothes and shoes and paying rent or the mortgage – after the payments ended.
The survey also found that parents with lower household incomes (under $50,000) reported having more difficulty covering those costs after the payments ended, compared with those with incomes between $50,000 and $74,999. Hispanic households had more difficulty meeting monthly expenses (69 percent) than White and Black households (55 percent and 54 percent, respectively. And people with disabilities were also more likely to report difficulty than respondents who did not report having a disability (75 percent vs. 57 percent for non-disabled respondents).
The end of the monthly CTC payments led to food insecurity for many parents, especially those with low incomes and Hispanic parents. Among Hispanics surveyed, 50 percent said they were unable to buy quality food and/or visited a food bank more frequently, compared to 39 percent of White respondents and 34 percent of Black respondents. “These figures are striking considering that at the time of the survey, most states were continuing to provide enhanced food assistance benefits (Emergency Allotments) to participants in the Supplemental Nutrition Assistance Program (SNAP),” the survey states.
Of those surveyed, 41 percent said the halt in payments increased their financial stress; 41 percent said it made it more difficult to pay the bills, rent or mortgage, and utilities; 37 percent said it reduced their ability to buy toys, gifts or activities for their children; 34 percent said it made it difficult to buy more or higher quality food; 25 percent said they needed to work more hours, and 17 percent said they visited food banks or food pantries more frequently.
Single parents – moms in particular – were especially hit hard when the monthly payments ended. About two in five parents who had never been married (41 percent) said it was much more difficult to meet monthly expenses, compared with just over one in five married parents (22 percent). “Single mothers make up the majority of single parents, suggesting a gender disparity in the impact of the payments’ expiration,” the survey states.
Among the survey’s other key findings:
- Nearly four in five eligible families (78 percent) filed for the CTC, either by filing a tax return or using an online tool.
- Hispanic parents increased their claims of the CTC after the monthly payments ended. An earlier CLASP survey conducted in October 2021 found that 64 percent had received the expanded benefits. That figure jumped to 75 percent in July 2022, after tax filing season ended. “These findings suggest that CTC outreach successfully raised awareness among the Hispanic community,” the survey found. (CHN, working with Partnership for America’s Children, spent 2021-2022 working to promote awareness of the CTC and how to apply for and receive benefits.)
- Respondents’ experiences with the expanded monthly CTC “made them feel lie the government cares about their family’s health and wellbeing, especially among Hispanic and Black respondents,” the survey found.
- “In Puerto Rico, implementation of the CTC was particularly complicated because most people, although they are U.S. citizens, are not ordinarily required to file federal tax returns. Still, residents of Puerto Rico were not able to receive the advanced monthly payments under the law.” Still, nearly nine in 10 (88 percent) of parents in Puerto Rico heard about the CTC prior to the July 2022 survey and “nearly seven in ten (68 percent) of all survey respondents claimed the CTC when they filed their tax return in 2022
Researchers drew three conclusions from their work. First, the “lives of many children and families were greatly improved by receiving the increased, monthly payments.”
Second, families faced hardship when the payments ended. And third, “monthly CTC payments were a popular policy that made parents feel like the government cares about their families.”
“Child allowance payments are effective at reducing child poverty, reducing food insecurity, reducing stress, and improving general health outcomes,” the survey concludes. “These payments are also good economic policy as they brought billions of dollars into local economies, helping families catch up with bills, access food and other basic needs, and afford clothes and shoes. All these purchases drive economic growth. The expanded payments also inspire families to feel like the government cares about their families, showing parents how public policy can benefit their day-to-day lives and helping develop much-needed trust in government programs and services.”
As Congress considers potential tax legislation later this year, the survey’s findings are another reminder that tax policy can play a dramatic role in reducing hardship – and why Congress should bring back the expanded Child Tax Credit. Learn more about the impact of the expanded Child Tax Credit on child poverty – and what the ending of the expanded CTC meant for the lowest-income families in 2022, on our webinar next Wednesday at 3:30 pm – register here.