Key CTC Changes Include:
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.
Key EITC Changes Include:
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 workers without children who are ages 19 to 24, and those who are over age 64, to claim the EITC, among other improvements.
ARPA Strategies & Resources from EITC FN Member Organizations
Changes to tax credits for low-income households in the American Rescue Plan Act (ARPA) are estimated to decrease child poverty by almost 50%. This dramatic decline in child poverty can only be obtained if we—including philanthropy—work across sectors to ensure that every family is able to enroll. This page provides a short overview of the credits, the changes in the ARPA, strategies for philanthropy, and additional resources.
This list of strategies was developed by the EITC Funders Network in conjunction with our network members. Here are some ways funders are doing their part to help with implementation of the ARPA.
Near-term Suggestions – given the import of tax credits and the recent expansion of federal EITC and CTC many families will not know they are eligible and will not fill out needed paperwork to receive the credits. In the near-term, we need to focus on aggressive outreach and engagement strategies.
- Support outreach and awareness efforts – especially those that are building cross-issue bridges (for example, between early childhood providers, diaper banks, homeless shelters, health care providers, or food banks and tax credits, for example) and those that help connect trusted messengers with families regarding the importance of applying for tax credits.
- Use and share coordinated messaging – efforts are underway to develop and distribute outreach materials including flyers, social media and text campaigns, mailers, and radio and TV ads. Using coordinated communications helps to streamline efforts and amplify key messages.
- Work collaboratively to identify hard-to-reach communities and support nonprofits and other trusted partners to ensure families can access tax credits in free and non-predatory settings.
- Support access to training for nonprofit staff to access and learn new enrollment software and support efforts of “navigators” to help families access credits.
Medium- and Long-term Suggestions – ensuring that every eligible family applies for and receives the tax credits helps to set the stage for continued public and private investment and continued tax credit expansions and modernizations.
- Support communications and narrative change work that underscores the importance of flexible resources for families. For example, providing funds to collect the stories of how families use the tax credits in ways that stabilize and support economic well-being.
- Build advocacy capacity to promote public investment in outreach for existing tax credits.
- Build advocacy capacity to promote state and federal expansions and modernizations of tax credits.
EITC and Tax Policy Related ARPA Resources
- 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)