Child Tax Credit's Role in Reducing US Child Poverty

The Issue: The rate of child poverty in the United States precipitously dropped in 2021 only to rise in more recent years. Federal tax credit policies — and especially the expansion of the federal Child Tax Credit (CTC) — were thought to have played a role in the reduction of child poverty at the time. What lessons did we learn from the 2021 expansion of the Child Tax Credit? Which provisions were the most effective in reducing child poverty, how much do they cost, and what are the tradeoffs? The Facts: During the pandemic, the federal government implemented a wide range of measures including expanded federal tax credits, expanded unemployment insurance, stimulus checks, and expanded nutrition assistance.  Child poverty was 11 percent in 2018 but only 2.8 percent in 2021 using supplemental poverty measurement estimates produced by the Urban Institute’s TRIM3 microsimulation model, which make adjustments for misreporting of safety net benefits and produce lower poverty rates compared t