What Does the Expanded Child Tax Credit Mean for Pennsylvania Families?

More than 2.3 million children—90% of all children under 18 in Pennsylvania—will benefit from the expansion of the child tax credit.

The pandemic has been a reality check for Kelsey Moyer and her family in many ways, but the biggest shock was to Moyer’s wallet.

“I don’t think any of us planned to still be affected by this pandemic over a year later,” she said. “I know I didn’t plan for reduced income for this length of time.”

Moyer, a 28-year-old mother of three from Berks County, is a server in a restaurant. The restaurant has been operating at only 50% capacity for months, so Moyer has had fewer customers to serve and less tip money. Moyer’s husband has kept his job and all his hours throughout the pandemic, but the family needed both of their incomes.

Extra money each month could make a difference for Moyer’s family and others who are struggling. Especially now, as the global health crisis continues to wreak havoc on jobs, housing, healthcare, and just about every aspect of life. 

Families are getting help through the expanded child tax credit included in the American Rescue Plan. The COVID-19 relief package President Joe Biden signed into law last week increases the child tax credit for the next year and makes the credits fully refundable.

The first child tax benefit of its kind, it is basically “guaranteed income” for families, said Marc Stier, director of the PA Budget and Policy Center.

“This could be the life raft that many people need,” Moyer said. “A few hundred dollars a month can really go a long way. I’m sure for many, this will help keep their heads above water.”

What is the Expanded Child Tax Credit?

The expanded credit provides $300 per month per child under age 6 and $250 per month per child ages 6 to 18 to families making less than $150,000 a year. Monthly payments will begin in July and continue through December. Families will then receive another six months worth of payments when they file their 2021 taxes.

The child tax credit would become fully refundable, meaning families get a refund even if the credit exceeds their total tax bill. 

Even if parents didn’t pay federal taxes or file an income tax return, they can still receive the benefit. 

“The great thing about this is that for the first time we have an almost universal child benefit,” Stier said. “About 892,000 children in our state who were left out before will now qualify for the credit.”

Unlike many other benefits and legislation, this one comes without a lot of red tape, time limits, or requirements. It simply calls for the IRS to send a check every month to families who qualify.

What Difference Will it Make in Pennsylvania?

More than 2.3 million children—90% of all children under 18 in Pennsylvania—will benefit from the expansion of the child tax credit, Stier said.

Roughly 435,000 Pennsylvania children currently live in poverty, and, Stier said, the child tax credit will help lift 140,000 (32%) of them out of poverty.

Moyer said she knows many families have had it harder than hers.

All the stimulus money Moyer has received so far has gone toward paying off debts, so she can be better prepared financially in the future if something like this happens again.

Life as a parent is unpredictable and unexpected expenses can crop up at any time, Moyer said. Her monthly payments from the expanded credit might have to go toward covering something besides bills—summer school programs for her son.

“He’s been struggling academically this year and could use some extra help,” Moyer said. Just some more fallout from the pandemic.