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September 29, 2021

Children living in rural counties are more likely than metropolitan children to benefit from the expansion of the child tax credit this year. An analysis of census data shows that about 49% of children in rural areas were likely to have received an increase in child tax credits due to changes affecting low-income families. In metropolitan areas, about 39% of children were likely to have benefited from these changes.

These provisions are expected to expire at the end of the year unless they are included in the infrastructure plan currently before Congress. The child tax credit was expanded as part of the American Recovery Act, which came into effect in March. Under the changes, the maximum credit per child has been increased from $ 2,000 per child to $ 3,600 for children under 6 and to $ 3,000 for children 6 and over. The credit was also expanded to include 17-year-olds for the first time. While all but the wealthiest families have benefited from these increases, other tax credit changes have focused on improving the outlook for low-income families.

These changes have helped children in rural areas disproportionately, according to an analysis of household income based on census data. Under the old rules, the tax credit did not apply until a household’s annual income exceeded $ 2,500. To receive full credit for a child, households had to earn about $ 12,000 or more. The second child tax credit was not fully implemented until a household earned about $ 21,000. To assess the impact of the change, we looked at the number of children in each county who live at 200% or less of the federal poverty line, according to the American Community Survey 2015-19.

The Center on Budget and Policy Priorities estimates that children below this threshold were more likely to have received only a partial or no tax credit under the old income rules. The expansion of the child tax credit is temporary. A version of the stimulus package currently before Congress would make the changes in income requirements permanent. The measure would also extend the increase in payment per child until 2025.

A key vote is expected on the infrastructure package on Thursday September 30th. The Center for Budget Policy and Priority estimates that the changes would reduce the number of children living below the poverty line by 40%. We also looked at how changes in income requirements in the Child Tax Credit may have affected different types of counties in the United States, depending on the size of metropolitan areas (graph above). Children in non-metropolitan counties (this is how we define rural areas for this analysis) were most likely to benefit.

Children living in the central counties of large and medium-sized metropolises were more likely than children in the suburbs to benefit from it. Children in small metropolitan areas were also more likely than children in suburban areas to benefit from the change. Here are the descriptions of each type of county in the graph: Metropolitan counties are based on the list generated by the Office of Management and Budget in 2013.


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Julio V. Miller

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