BRIEF - State Child Tax Credits Boosted Financial Security for Families

When designed well, they build on the powerful base of the federal CTC, counteract some of its deficiencies, and lead to meaningful reductions in child poverty and deep poverty.[1] More state lawmakers are choosing to help families in this way: for the 2025 tax year, 15 states and the District of Columbia will provide Child Tax Credits, many of which are targeted to those who most need them and re. [...] INSTITUTE ON TAXATION AND ECONOMIC POLICY 2 The federal CTC excludes some low-income families from receiving the full credit by requiring a minimum level of earnings and by not making the credit fully refundable to those whose income tax payments are smaller than the credit they would otherwise receive. [...] Qualifying Minnesota families will soon be able to claim half of their prior year’s CTC as periodic payments in July through December and will receive the remainder of their credit with their tax return.[9] State Action on Child Tax Credits in 2024 State Type Description In 2023, Colorado drastically restructured its existing Child Tax Credit from a percent match of the federal credit to a flat am. [...] The advantage of implementing a credit separate from the federal CTC is that states can avoid the shortcomings of the federal credit (particularly the earnings requirement and lack of full refundability) that keep many lower-income families from receiving the full benefit. [...] State lawmakers can make up for the main shortcoming of the federal CTC by ensuring that children in families too poor to receive the full federal credit are brought up to the full $2,000 amount, or to some portion of that amount.