How Proposed Child Tax Credit Expansion Could Uplift Latino Families

If approved, a bipartisan proposal could provide a permanent tax credit for many American families. The credit currently sits at $3,000 a year for each child between six and 17, and $3,600 per year for each child aged five and under for eligible families.

The initiative, introduced this week by Democratic and Republican lawmakers, would apply to families with household incomes of less than $150,000 annually, as well as to single filers with incomes of less than $75,000.

The expansion of the Child Tax Credit would be an invaluable benefit for thousands of Latino families, who traditionally have incomes ranking below the median of other groups in the country, such as whites or Asians, and on par with Black families.

The proposal to expand the CTC is an extension of the American Rescue Plan that the Biden administration implemented in 2021, supporting the existing Child Tax Credit initiative introduced in the same year.

According to the White House, the version of the CTC under the 2021 rescue plan was touted as "the first-ever monthly payment for a major tax credit" in the U.S.

The American Rescue Plan's expansion of the 2021 Child Tax Credit helped drive a 43% reduction in Latino child poverty in 2021, cutting it to record lows," said the White House in 2022.

One of the most visible effects of the ARP, according to the White House, was to help some 7 million Latino families pay rent on their homes, reducing eviction filings by nearly a quarter. According to Treasury data, nearly 80% of ARP funds went to low-income renters, with the largest share benefiting Latino households.

The initiative filed on Tuesday (Jan. 16) includes a $78 billion tax relief package, primarily aimed at supporting the CTC, along with provisions for business tax breaks and funding for affordable housing and disaster relief.

"American families will benefit from this bipartisan agreement that provides greater tax relief, strengthens Main Street businesses, boosts our competitiveness with China, and creates jobs," said Representative Jason Smith (R-MO), who chairs the House Ways and Means Committee, in a joint statement with Senator Ron Wyden (D-OR), chair of the Senate Finance Committee.

According to the Institute on Taxation and Economic Policy (ITEP), an expansion of the Child Tax Credit, at least to 2021 levels, could benefit nearly 60 million children.

"It would help the lowest-income children the most and would particularly help children and families of color," stated ITEP in an August 2023 analysis.

"Black and Hispanic families are disproportionately harmed by current rules preventing low-income people from receiving the full federal Child Tax Credit. Next year, 45 percent of Black children and 42 percent of Hispanic children will not receive the full credit, roughly double the percentages of white and Asian children who are left out," said ITEP.

According to ITEP, Black and Hispanic families with kids would receive slightly larger average credits under this expansion. This is because the expansion targets low- and middle-income households, and white children are disproportionately in families whose incomes exceed $150,000, making them ineligible for the full credit.

Who is eligible?

According to UnidosUS, currently, under ARP almost every family can receive money from the CTC. This includes families:

• Who haven't filed a tax return in recent years.
• With very low or without recent income.
• With a child with a Social Security number (SSN), even if the filer doesn't have an SSN.
• Families that are residents of Puerto Rico.
• Married couples making less than $150,000, single filers making $75,000, and heads of households making $112,500 a year can receive the full payment. Families with incomes under $200,000 for single files and $400,000 can still receive up to 2,000 per eligible child.
• --Source: UnidosUs