A group of over 300 organizations is calling the US Senate to pass legislation expanding the Child Tax Credit for the next three years. The House passed the bill in January and now its future rests in the hands of the Senate. A letter from the Automatic Benefit for Children (ABC) Coalition, which gathers national and local organizations advocating for child welfare, claims the expansion would lift over 16 million children out of poverty.
How much credit will you qualify for?
Currently, almost 19 million children receive less than the full Child Tax Credit amount since their parents’ incomes are too low– including, 6.6 million Latinos. In Pennsylvania, over half a million children, including 150,000 Latino children are now excluded from the full amount.
This is because families with the highest need get less under the current structure. For instance, a married couple with one child cannot receive the maximum $2,000 credit per child until they hit about $30,000 in earnings for 2023.
The new proposal would make it easier for families with lower incomes to access a higher refund amount. The maximum refundable amount will increase to $1800 for tax year 2023, $1900 for 2024, and $2000 for 2025. The Center on Budget and Policy Priorities estimates a married couple with three young children making $32,000 would gain $975 more in the first year.
Impact on the Barrio Economy
Amidst increases in the price of food and other necessities, advocates are calling for additional aid to families. According to the ABC Coalition letter, “families in your state and around the country who are struggling with high food, housing, and energy costs need this relief now.”
Families could use this credit to invest in the local economy, including purchasing groceries locally. For Will Gonzalez, Executive Director of North Philadelphia-based nonprofit Ceiba, “this legislation will address childhood poverty in a significant way and can be a boost to the economy of our community.” His team sees over 800 families that qualify for the child tax credit every year.
An expected reduction in Black and Latino poverty
A key provision of the bill highlighted in the letter, known as the “lookback provision,” would allow families to choose between their current or previous year’s earnings to determine the credit amount, instead of being limited to the current year. This means that if your earnings drop unprecedentedly from one year to the next, you could still claim a higher refundable portion of the credit by “looking back” to your previous year’s earnings.
“Because their parents disproportionately work at low wages, more than one in three Black and Latino children and three in ten American Indian/Alaska Native children under 17 will benefit from this bill,” reads a statement from the DC-based advocacy nonprofit Coalition on Human Needs, also a member of the ABC Coalition.
In 2021, the Child Tax Credit was expanded only temporarily to aid people during the pandemic. This has been linked to a record-low child poverty rate. Studies from Columbia University estimated at the time that a permanent expansion could cut Black and Hispanic poverty in half. The current proposal is not as ambitious and does not include provisions like the monthly payments that were part of the previous expansion.
What can you expect to see next?
Organizations who signed onto the letter include Unidos US, Hispanic Federation, Community Legal Services of Philadelphia, and the Coalition on Human Needs. The Bill is expected to be voted on by the US Senate in the next couple of days.
Ceiba and other Latinx-led nonprofits in North Philadelphia like HACE and Congreso provide free tax preparation services and can help eligible families obtain the Child Tax Credit. If you are interested in learning more, you can visit www.ledcphiladelphia.org or call 215-634-7245 for an appointment.
