The Data is in: Families are Spending their Child Tax Credits on Basic Needs

Oct 19, 2021

By Jackie Semmens

We’ve written before about how the expanded Child Tax Credit (CTC) is a historical step in lifting children out of poverty. But new data released from the U.S. Census Bureau can help us better understand how families use the expanded tax credit to meet their basic needs.

First, a quick recap about what the expanded CTC is: 

The CTC has long been part of our tax code. This past summer, Congress increased and expanded it to help families recover from the pandemic and address the cost of raising children. Congress increased the benefit amount, included 17-year-olds, and allowed families living on the lowest incomes to receive the full benefit for the first time. Families receive $250 a month per child aged 6-17 and $300 a month for children under 6.

Over 209,000 children qualify for the credit in Montana. The expansion is projected to reduce childhood poverty in the state by 45 percent a year if made permanent. For more information on how the expanded CTC works, be sure to read our blog post here.          

New Data Shows Families in Montana are using CTC to meet basic needs.

Since the summer of 2020. the U.S. Census Bureau has been conducting the Pulse Survey to measure the effects of the pandemic on households. Recently, the survey has asked households with children how they have spent their credits.

Data from July through September shows us that families in Montana used their first two CTC payments to meet basic needs, including food, clothing, rent, and utilities.

Here are some important takeaways from the data:

• Nearly half (44%) of all families are using their credit on food for their household.
• 3 out of 5 families spent their credits on basic needs and/or educational expenses regardless of their income.

For families living on less than $35,000 a year, the credit is even more essential. Here’s how families living on low incomes used their credit:

• Food – 65% of families spent their credit on food.
• Utilities – 40% of families used their credit on utility bills.
• Educational expenses – 34% of families used their credit on educational needs, including after-school care.Clothing – 32% of families used their credit on clothing.
• Rent or mortgage – 29% of families paid rent or their mortgage with their tax credit. 
• Basic needs and educational expenses – 4 out of 5 low-income families used their credit on basic needs and/or educational expenses. 

The tax credit also helps families afford to work.

In Montana, ten percent of families, and 17 percent of families with children under the age of 5, used the credit to pay child care expenses. The coronavirus pandemic has forced many parents, especially mothers, out of the workforce, due to health concerns, school closures, and a lack of affordable child care. For families who need child care to work, the credit helps make work accessible.

Congress should make the expanded CTC permanent.

This new data from the Census Bureau demonstrates how much families need this additional support. When families can afford rent, food, and other necessities, children ultimately do better. Congress should make the expanded CTC permanent and continue this historic victory against childhood poverty.