The American Rescue Plan (ARP) dramatically increased the value of the CTC, from $2,000 per child to up to $3,600 per child under six and $3,000 per child six and older. The ARP also expanded the CTC so that it is now fully refundable, and previously ineligible low-income families will receive the full credit. Half of the expanded CTC is being distributed in advance via monthly payments, helping families meet their financial needs in real time. According to JEC analysis of data from the Census Bureau, within weeks of the first CTC payments being distributed, the expanded CTC was already having a major impact on family budgets, with dramatic declines in food insufficiency and financial hardship. The Build Back Better Act proposes to extend the expanded CTC through 2022, including the provisions that increased the value of the CTC and made it fully refundable.
Over the long term, research has found that an extra $3,000 in a family’s annual income when a child is younger than five leads to 19% higher future earnings. Other research on investments in early childhood finds that increasing family incomes has tangible outcomes for children, including higher test scores and high school and college graduation rates, improved health outcomes, lower rates of incarceration and reduced need for future income support. Overall, a growing body of academic research finds that public investments in children yield significant long-term returns with economy-wide benefits, as healthier, more-educated kids grow up to be more productive workers with higher earnings, which in turn generates higher future revenues.
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