The federal child tax credit expired last year, but here are the 10 states stepping up with their own benefits
Vermont will send child tax credit checks worth $1,000 per child to most families with children 5 and under, becoming the latest state to step up in face of federal inaction.
The federal child tax credit was enhanced as part of 2021’s American Rescue Plan. It was made refundable and increased to $3,000 per child ages 6 to 17 and $3,600 for children under 6. Half of it was made available to parents in advance via monthly payments throughout the second half of 2021. In that time, there were significant decreases in child poverty and food scarcity, and government data showed upticks in spending on necessities like clothing, utilities, and more.
Then Republicans in Congress and Democratic Sen. Joe Manchin (W.V.) let it expire. This year, the credit reverts to its pre-2021 structure: a nonrefundable credit worth up to $2,000 per child, ages 16 and under, that guardians receive when they file a tax return next year. Gone are the monthly checks that helped many families stay afloat as inflation skyrocketed. Millions of children have fallen back into poverty, reports have found.
Some states have stepped in to make up some of the difference. Vermont joins nine others in offering a state-level child tax credit, in addition to California, Colorado, Idaho, New Mexico, New York, Maine, Maryland, Massachusetts, and Oklahoma. (Some of these states introduced the legislation to create these policies before the pandemic.)
Additionally, North Carolina offers a child deduction, rather than a credit, and Michigan’s state legislature has passed a credit worth $500 for most children, though it is not law yet. Connecticut is offering a one-time tax rebate worth up to $250 per child, capped at $750 for three children. Families need to apply to receive it.
The size of the credit and eligibility requirements vary greatly by state, according to the Niskanen Center, a nonpartisan think tank that tracks CTC policy. Vermont’s $1,000 payment, for example, is reserved for children 5 and under in families earning $125,000 or less. The credit decreases by $20 for every $1,000 in income over that threshold, according to local media.
In Massachusetts, existing tax deductions for dependents were converted into two refundable credits. These state tax credits are worth between $180 to $240 per child under 12 for up to two children in all families, regardless of household income. Republican Governor Charlie Baker has proposed doubling the value.
The map below breaks down where state legislatures have implemented state-level child tax credits.
In some states, the credit is nonrefundable, which means it can reduce someone's tax liability as low as $0. Taxpayers must file a tax return to receive it. Others, including Vermont, have made it fully refundable, meaning that it can reduce a filer's tax liability below $0, and they will receive a refund. Families don't need to have a tax liability to claim the credit, which expands the benefits to the lowest-income families, who, experts note, need the money—and benefit from it—the most.
"Whether families can get it if they have little to no income makes a huge difference," says Josh McCabe, senior family economic security analyst at the Niskanen Center, noting that even the less generous credits are a big deal for many household budgets. "States are now giving a life preserver to families who are struggling."
Most of the credits are permanent (New Mexico's expires in 2031), and many received bipartisan support from state lawmakers, a welcome change from Congress, where mostly Democrats supported the enhanced credit, says McCabe.
There is a wealth of research that finds more generous family benefits are associated with higher educational attainment and increased wages when children grow up, says McCabe. Maternal health outcomes also improve. He also notes that because it is a universal benefit, it doesn't have the stigma associated with other social assistance programs.
"It’s probably the most underrated approach to poverty," McCabe says of the credit. "It’s not [explicitly] an antipoverty program, but it has a huge antipoverty effect."
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