Qualifying lower-income families prefer monthly payments of the child tax credit to help pay for food, rent, childcare, and more.
The American Rescue Plan temporarily changed how families received the child tax credit, shifting from an annual refund to a monthly payment. Many families, particularly lower-income families, noted a preference for the monthly payment. How successful monthly payments are in the future will likely depend on how easy enrollment is and whether low-income families will be protected from repaying errantly paid credits.
The following prefer monthly child tax credit (CTC) payments instead of an annual refund:
More than half (54%) of U.S. families with incomes at or below the federal poverty level (FPL);
57% of families with incomes between 100% and 200% of the FPL;
45% of nonelderly adults surveyed across all income levels; and
all adults except those in the highest income bracket surveyed (600% or more of the FPL).
Some evidence suggests that tax refunds—which typically include the CTC for low-income families—were used to purchase basic needs, pay down debt, and pay for items such as health care that families had delayed throughout the year. These findings indicate that a payment delivered more frequently than annually might be beneficial, something policymakers should keep in mind amid rising prices.
Four Reasons the Expanded Child Tax Credit Should be Permanent
The expanded Child Tax Credit was one of the best policy decisions in generations. As we look to the future, we should invest in what works.
The 2021 Child Tax Credit: Implications for Health
The Child Tax Credit is a near-universal benefit for families with children ages birth to 17 and lifts millions of children out of poverty annually. What shape the Child Tax Credit will take in coming years remains in flux.