The American Rescue Plan temporarily changed how families received the child tax credit, shifting from an annual refund to a monthly payment. Many families, particularly lower-income families, noted a preference for the monthly payment. How successful monthly payments are in the future will likely depend on how easy enrollment is and whether low-income families will be protected from repaying errantly paid credits.
The following prefer monthly child tax credit (CTC) payments instead of an annual refund:
Some evidence suggests that tax refunds—which typically include the CTC for low-income families—were used to purchase basic needs, pay down debt, and pay for items such as health care that families had delayed throughout the year. These findings indicate that a payment delivered more frequently than annually might be beneficial, something policymakers should keep in mind amid rising prices.
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The child tax credit (CTC) plays a major role in reducing child poverty, and its expansion under the American Rescue Plan Act of 2021 (ARP) would save more than four million children from poverty, researchers find.
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