The families of more than half of all rural America’s children could lose thousands of dollars each when an expanded Child Tax Credit expires at the end of the year.
The expanded tax credit was part of the American Rescue Plan, enacted in March. A one-year renewal of the expansion is included in the current version of the Build Back Better Act, but Congress adjourned until next year without voting on the legislation. The expanded tax credit will expire December 31.
Before the credit was expanded, an estimated 56% of all rural children didn’t receive the entire tax credit because their families didn’t earn enough money to qualify. In metropolitan areas, about 48% of children lost some or all of the credit. The American Rescue Plan eliminated the income threshold and expanded the credit from $2,000 per child to $3,000, with an additional $600 for children under 6.
The changes raised an estimated 4.1 million children out of poverty, according to the Center for Budget and Policy Priorities. All but 15% of the poverty reduction was because of elimination of the income requirements to receive the tax credit.
The Build Back Better legislation died before Christmas when West Virginia Senator Joe Manchin (D) said he would not support the current version of the bill. Manchin says he supports the tax credit but is worried about the price tag for the legislation.
Privately, Manchin told colleagues that he thinks low-income recipients will use the credit to buy drugs, according to press reports. Manchin has not commented on those reports and has not responded to the Daily Yonder’s request for comment.
Recent Census data shows that more than 90% of families that have received payments from the expanded Child Tax Credit have spent the money on basic necessities like food, shelter, clothing, and utilities.
Manchin’s constituents in West Virginia are especially vulnerable to the elimination of the expanded tax credit. The state has one of the highest child poverty rates in the U.S. About 48% of children 17 and under live at 200% of the poverty rate, considered an indicator of serious financial challenge. West Virginia's rate of children living at or below 200% of poverty is the fifth highest in the U.S.
In West Virginia, expiration of the Child Tax Credit expansion will eliminate or reduce the credit for approximately 72,000 low-income rural children and nearly 100,000 low-income children who live in metropolitan areas.
In 30 of West Virginia’s 55 counties, more than half of all children live in low-income households. Twenty-two of those low-income counties are rural.
Nationally, rural counties are also more likely to have larger percentages of children in low-income families. Of the 500 counties with the highest rates of low-income children, 432 are rural.
Expansion of the Child Tax Credit also provided monthly advance payments to families for a portion of their expected credit. The last advance payment went out December 15, 2021. Families will not receive additional payments until they file their tax returns and receive a refund from the IRS.
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