How the child tax credit expansion could help NYC families


February 22, 2024

By Karen Yi for Gothamist

More than 260,000 low- and middle-income families in New York City would benefit from a proposed expansion to a federal tax break meant to help cover the costs of raising children, according to a policy research institute.

Last month, the House passed a bipartisan tax package that included changes to the child tax credit that’s been around since the late 1990s. The bill, which still needs U.S. Senate approval, amends the long-standing tax break to help lower-income families with multiple children access the maximum benefit sooner.

The expanded tax credit would help about 35% of the city’s families, and would particularly help households with multiple children qualify for bigger tax credits and more money, according to an analysis of census data by the Center for New York City Affairs.

The bipartisan push for the expanded tax credit comes as a quarter of New York City children lived in poverty in 2022, according to a new report released on Wednesday by a Columbia University research group and the Robin Hood Foundation.

The report found that 420,000 children lived in poverty in 2022, up more than 60% from the year before, amid the expiration of pandemic-era benefits — including a generous child tax credit.

Child welfare nonprofits and antipoverty groups say the expansion of the tax credit is a good step toward pulling families above and over the poverty line. But the measure still falls short of the less restrictive rules implemented during the COVID-19 pandemic.

“It still has in place a lot of the work requirements, complexities of how much you get refunded based on your income,” said Lauren Melodia, deputy director of economic and fiscal policies at the New School’s Center for New York City Affairs. Melodia used census data to estimate the number of affected families.

Melodia said about 730,000 city families are eligible for the credit but families in deep poverty with little to no income will still be left out since they’re below the income threshold or earn too little to file taxes. The Tax Policy Center, a nonpartisan think tank, estimates that eligible households will receive a tax break of $680 on average.

The proposed credit requires single parents to earn about $22,000 or more a year to be eligible for the full $2,000 credit. Married households with children would be required to earn an annual minimum of $30,000 to receive the full credit for each of their children, Melodia said. Families earning less than that only receive a partial credit as a way to incentivize work.

The expanded child tax credit currently under congressional consideration doesn’t go nearly as far as the temporary changes made during the pandemic, which were credited with halving national child poverty nationwide. The pandemic-era expansion lifted 120,000 New York City children out of poverty and reduced child poverty rates in the five boroughs by 30% in 2021, according to Robin Hood.

“It wouldn’t return us to what we had during 2021,” said Pete Nabozny, director of policy at the Children’s Agenda. “But it would mark a pretty significant improvement over the current child tax credit at the federal level. So it puts us somewhere in between the two.”

The pandemic-era child tax credit boosted the annual amount families received for each child from a maximum of $2,000 to $3,600 and distributed the funds in monthly installments rather than a lump sum. The previous measure also eliminated the minimum income threshold.

One of the biggest changes to the expansion bill is that families — especially those with multiple children — that receive only partial credit, or a portion of the maximum allowed funds, would be allowed to receive the full $2,000 credit sooner.

The Institute on Taxation and Economic Policy estimates that 90% of the expansion would help the poorest families who earn under $50,900 but make at least $2,500 a year, and that about 14 million kids — about a fifth of U.S. children — would benefit.

“That can be the difference between being evicted and staying housed. It can be the difference between buying groceries or responding to a medical emergency,” said Alice Bufkin, associate executive director of policy at the Citizens’ Committee for Children.

“It’s really what can keep your lights on and your kids clothes and your bills paid. Every little bit counts when we are living in a city that is so expensive and hard to live in,” Bufkin said.

Child advocates are also hopeful the state will amend its own child tax credit rules.

A proposal from state Sen. Andrew Gounardes would boost the annual credit from a maximum of $330 to $1,600 over several years, eliminate minimum income requirements qualifying families as long as they file their taxes and distribute refunds in quarterly installments.

Tax credit programs “trusts families to use the money on the things that they need,” Nabozny said. “It can be really challenging for families who are enrolled in various public assistance programs that have different eligibility rules.”

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