Measure is part of bipartisan tax legislation that passed in the House of Representatives last week and now moves to the Senate.
by Adele Uphaus
MANAGING EDITOR AND CORRESPONDENT
An estimated 367,000 children in Virginia will benefit from the expansion of the Child Tax Credit, according to an analysis conducted last month by the Center on Budget and Policy Priorities.
A bipartisan majority in the House of Representatives last week passed a bill that would, among other things, increase the amount of the Child Tax Credit and expand the number of families who can access the credit.
It will specifically reach families “with the lowest incomes who, due to gaps in the existing child tax credit law, aren’t able to access those funds,” said Sarah Steely, director of No Kid Hungry Virginia, a nonprofit working to end childhood hunger.
“The Child Tax Credit has been around for a while, and it’s meant to help families cover the additional cost of having children—things kids need like diapers, glasses, medicine, and basic needs like a roof over their heads and food in their bellies,” Steely said.
Under current tax law, families are eligible for a tax credit of up to $2,000 for each of their children. But they are only eligible for the full credit if they earn a certain minimum income—$24,800 per year for a single parent with one child—and low-income families with multiple children can only claim a portion of the credit.
The new legislation increases the $2,000-per-child maximum credit to keep up with inflation and also increases the amount that low-income families, especially those with multiple children, can receive through the credit.
Right now, a single parent with three children who earns $12,500 per year can claim a maximum benefit of about $1,500. Under the expansion, this parent would receive $4,500.
Congress in 2021 expanded the Child Tax Credit for one year as part of its pandemic relief efforts to as much as $3,600 per child for all families, even those with no incomes.
That year also saw an “unprecedented” 46% reduction in the child poverty rate, Steely said.
“Experts attribute the majority of that drop, like 90% of it, to the Child Tax Credit expansion,” she said. “That alone points to the fact that families were using that money for basic needs like food and rent and medical expenses.”
A survey conducted in September of 2021 by Washington University in St. Louis’s Social Policy Institute, along with Appalachian State University, found that purchasing food was the most common use of the Child Tax Credit payments—which the government mailed monthly—followed by managing bills and paying rent.
“Even though the current proposal doesn’t provide all of the aspects that were included in the 2021 expansion, it’s still going to make a meaningful difference for families across the country,” Steely said. “This is more than just a change in tax policy—it supports families, it fights hunger, and it reduces poverty.”
Rep. Abigail Spanberger, in a press release issued last week, said she supported the expansion to help Virginia families who live paycheck to paycheck.
“For many of these families, just one emergency could lead to financial ruin,” Spanberger said. “When we expanded the Child Tax Credit under the American Rescue Plan back in 2021, we slashed child poverty rates — and thousands of Virginia families breathed a sigh of relief when it came to keeping the lights on, paying for childcare, or filling up their cars.”
She urged the Senate to pass the legislation quickly in order to benefit families this tax season.
Virginia Senator Tim Kaine said last week that he will support the tax bill, which also includes measures to enhance the Low Income Housing Tax Credit and to support small businesses.
“This bipartisan legislation combines three bills I’ve cosponsored—a tax credit to reduce child poverty, a housing tax credit to expand affordable housing for low- and moderate-income families, and a corporate research tax credit to spur innovation and create jobs. Let’s get it done in the Senate!” Kaine said.
