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How The Stimulus' Child Tax Credit Will Help Families Affected by the Pandemic

A woman and a man each carry a child on their back while smiling.
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Key Takeaways

  • A $1.9 trillion stimulus package has passed the House of Representatives and the Senate with President Biden expected to sign it into law on Friday.
  • The stimulus will provide either $3,000 or $3,600 child tax credits to families, based on their child's age.
  • During the pandemic, parents have needed to take extra time off or leave work altogether to care for their children.

On Wednesday, the U.S. House of Representatives passed a $1.9 trillion stimulus package, clearing the way for President Biden to sign it into law. While the bill provides funds aimed at mitigating many of the pandemic’s harmful effects, one aspect, in particular, is especially vital to families: an expanded child tax credit. 

How Much Will Families Get?

At the moment, families can receive one $2,000 tax credit per child under 17, once a year. Under the new tax credit families can receive $3,600 per child under six and $3,000 for each child under 18.

The IRS will distribute part of the amount in monthly sums of $250 or $300 between July and December. It will work as a guaranteed income for one year. 

Single parents making up to $75,000 per year and couples making up to $150,000 per year qualify for the full credit. From there, the credit reduces as income increases. However, the original $2,000 can still be credited for people who would have qualified based on their salary. 

The stimulus will also provide $1,400 checks to adults with an adjusted gross income of $75,000 or less. The same amount will be sent for each dependent, regardless of their age.

Martha Buell, PhD

Families have been financially slammed by COVID. In order for families to start to regain a steady financial footing, they are going to need to get back in the job market.

— Martha Buell, PhD

“Families have been financially slammed by COVID. In order for families to start to regain a steady financial footing, they are going to need to get back in the job market,” says Martha Buell, PhD, a professor specialized in human development and family sciences at the University of Delaware. “But a perennial barrier to workforce participation is the finding and paying for child care. Any help with child care costs will help families get back on their feet.”

The increased funds are popular among Americans. In a poll from Data For Progress, 59% of Americans supported refundable tax credits to mitigate childcare costs and lower child poverty rates in the United States.

Why This Matters

The Center for American Progress (CAP) reports that, between September and November 2020, there was a 144% increase in childcare-related absences from work, compared to the same period in 2019. Work absences due to childcare reached a high in October, with 93,900 instances recorded in one week.

The higher credit for children under six is essential. In the same timeframe, CAP found that 700,000 fewer parents with a child under five were working in the paid workforce than the previous year. “The real importance of the child care tax credit is that families struggle with costs of child care. Child care for an infant can cost as much as college tuition, but families can't get loans to pay for child care,” says Buell. 

Between March and April 2020, over 350,000 childcare jobs were lost, with only about half recovered by December. Buell expresses concern that the cost of childcare may increase with limited spots available. 

Sabrina Romanoff, PysD

Child poverty rates in the United States are relatively high compared to other developed countries.

— Sabrina Romanoff, PysD

Before the pandemic, child poverty was already a prominent issue in the United States. As of 2019, 14% or 10.5 million children under age 18 lived in poverty. That number was higher for Hispanic children at 21% and Black children at 26%.

“Child poverty rates in the United States are relatively high compared to other developed countries,” says Dr. Sabrina Romanoff, a Harvard-trained clinical psychologist. “These inequalities have been further magnified by the lack of access to resources many already struggling families have been grappling with throughout the pandemic."

What This Means For You

For families who qualify for this tax credit, it will be a relief financially but will also ease the mental health crisis America is facing.

When financial strain is lifted, parents are then able to invest more time in other key areas, "As these resources become available, there will be more capacity to meet other critical, non-financial, needs like more time to spend with children instead of working an extra shift, less parental stress, and more opportunities for positive experiences for growth, learning, and parent-child bonding,” says Romanoff.

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Article Sources
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  1. Malik R. Saving child care means preserving jobs and supporting working families and small businesses. Center for American Progress. Published January 13, 2021.

  2. Thomas D, Fry R. Prior to COVID-19, child poverty rates had reached record lows in U.S. Pew Research Center. Published November 30, 2020.