Key Changes Included in the American Rescue Plan Act: The American Rescue Plan Act (ARPA) included important changes to the federal EITC and CTC:
The ARPA provides a substantial expansion of the EITC for low-wage workers who are not raising children in their home, which nearly triples the maximum benefit for those workers from $543 to $1,502. The bill also allows childless workers who are ages 19 to 24, and those who are over age 64, to claim the EITC, among other improvements.
The ARPA changes the way the CTC is calculated in three important ways. The maximum credit increases from $2,000 for each child under age 17 to $3,000 for those ages 6 to 17 and $3,600 for younger children. The CTC will be fully refundable. Low-income parents will qualify for the full benefit even if they do not work. This piece is key for the lowest income children. Children aged 17 will be eligible for the refundable benefit. Previously they were allowed no more than $500—the same amount that is still available for families with older children. And it was nonrefundable– it could only be used to offset taxes. For the first time, families will be able to receive the CTC monthly (starting in July 2021). The IRS estimates that 88% of eligible families are already in the system and will not need to fill out additional paperwork to enroll. However, that leaves 12% who are not currently part of the system—the hardest to reach families—who will need to enroll to receive the benefits.
- Child Tax Credit FAQ (Center on Budget and Policy Priorities)
- How to access benefits – general overview (National Women’s Law Center)
- EITC Central– EITC Information & Resources Page (IRS)
- Estimates of child poverty reduction due to ARPA by state (Columbia University Center on Social Policy)
Outreach to Hard-to-Reach Communities
- What did we know about people who don’t file taxes (non-filers) based on estimates in advance of EIP (Center on Budget and Policy Priorities)
- IRS estimates of non-filers by state (IRS)
- Encouraging SNAP participants to file for the child tax credit (University of Michigan and Propel)