Under the 2021 American Rescue Plan, the Child Tax Credit (CTC) was temporarily expanded in important ways, leading to a historic reduction in child poverty nationally and in Maine and furthering Invest in Tomorrow’s goal of cutting child poverty and strengthening the workforce. The enhanced CTC provided up to $3,600 per child (depending on age), and was distributed in advance monthly payments so families had predictable income they could count on. Critically, it the credit made “fully refundable,” meaning it was available to the 49,000 Maine children (and in particular BIPOC Mainers and those in rural areas) who were previously unable to receive the full credit because their income is too low.

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While it was in effect, the federal CTC cut Maine’s child poverty rate nearly in half,  temporarily achieving Invest in Tomorrow’s goal. The federal CTC provides a roadmap for how we can use targeted, effective policy solutions to provide meaningful economic security and opportunity to Maine families

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National and state data from the CTC show us the ways in which the CTC not only enabled Maine families to get by, but also supported them in getting ahead. The enhanced CTC provided short-term and long-term benefits to Maine families and children, as well as to our communities and the state’s economy:

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• Census data shows that child poverty dropped sharply while the CTC was in effect. In Maine, child poverty was cut nearly in half. If there had been no CTC, Maine’s Supplemental Child Poverty rate would have been 7.6%. With the CTC, it was 3.6% – a 51% percent change. Maine ranks 8th in states with the biggest poverty reduction impact from the CTC.

 

• Investing in children in low-income families by expanding programs like the Child Tax Credit has been shown to improve outcomes for those children over their whole lives, including higher educational attainment, better health, and higher earnings as adults. The expanded federal CTC has an estimated 1,000% return on investment per year (roughly $10 for each dollar spent), pointing to the downstream benefits of investing in children through the CTC. 

 

• The CTC allows people to afford things like child care so they can work, take care of their family, and do their part to keep growing our economy

 

• In Maine, 88% of families with income below $35,000 spent their Child Tax Credit payments on basic necessities (food, clothing, rent, mortgage, utilities), and/or education costs, such as food, utilities, rent, and diapers. 

 

• Fifty three percent of Maine households spent CTC funds on food. Before the enhanced CTC, food insufficiency among Mainers was at 10.6%, compared to 5.8% post-CTC – an 84% percent change.

Research indicates the federal CTC actually increased the share of adults who were working. Among children whose families don’t have earnings, the overwhelming majority have parents or caregivers who are elderly, disabled or ill, caring for a small child, or between jobs.

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Learn more about what steps have been taken in Maine to make our state Child Tax Credit equivalent fully refundable here. 

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