ProjectRedesigning the Child Tax Credit to Reduce Economic Inequality

The Child Tax Credit (CTC), which provides families with up to $2,000 per child under age 17, is a substantial source of support for many families. When the American Rescue Plan temporarily expanded the CTC in 2021, it dramatically impacted the national poverty rate, cutting child poverty in half. However, some groups—particularly Latine and Black families—could not access the credits at the same rates as others.

With current federal tax policies slated to expire at the end of 2025, understanding gaps in access to the CTC and effective ways to close them is more important than ever. Funded by the WT Grant Foundation, the Urban Institute and Urban-Brookings Tax Policy Center researchers will combine policy analysis with insights from affected families to identify sustainable changes in the tax system that can improve access to the CTC.

Through the Redesigning the Child Tax Credit to Reduce Economic Inequality project, researchers from the Urban Institute and Tax Policy Center will combine feedback from affected families with policy analyses to inform sustainable changes in the tax system that can improve access to the CTC.

Our Approach to Seeking Insights

This project has two phases. In the first phase, Urban researchers formed family advisory boards composed of parents from Latine and Black families with dependent children ages 5 through 25 in Massachusetts, New Mexico, and Washington, DC. Recruitment took place in late summer and early fall 2024 in partnership with community-based organizations.

The family advisory board members learned about the current structure of the CTC then worked with the research team to suggest changes that could make the CTC more accessible to other families like theirs.

In the project’s second phase, Urban and Tax Policy Center researchers are estimating the effects of the suggested CTC design changes to determine whether these changes could improve equity and access. The research team will return the findings to the family advisory boards for their input, informing the final federal policy recommendations.

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Tags Assistance for women and children Black/African American communities Child tax credit Community engagement Economic well-being Federal tax issues and reform proposals Financial knowledge and capability Immigrant access to the safety net Immigrant children, families, and communities Immigrant communities and racial equity Individual taxes Inequality and mobility Latinx communities Mixed-status immigrant families Racial and ethnic disparities Racial barriers to accessing the safety net Racial inequities in economic mobility Refundable tax credits State and local tax issues Taxes and social policy Welfare and safety net programs Work supports Children and youth Data collection Participatory research Qualitative data analysis