The Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) together cut child poverty rates by about 25 percent in 2025, according to new data from the Census. That is larger than the effect of other important programs intended to reduce childhood poverty such as SNAP and WIC. Still, these programs, particularly the CTC, could be improved to help many more working-class families struggling to pay the bills.
In 2021, the CTC was expanded and made fully available to all children. That year, child poverty was cut in half. Unfortunately, that expansion only lasted one year and was not extended. While prominent Republicans pretended to care about expanding the CTC in the run-up to the 2024 election, their giant 2025 tax bill did the bare minimum.
Percentage of children moved out of poverty by refundable tax credits in 2024 (Pre-OBBBA)
Percentage of children moved out of poverty by refundable tax credits in 2025 (Post-OBBBA)
The so-called “One Big Beautiful Bill Act” (OBBBA) included a $200 increase in the maximum CTC amount. (Notably, this left the CTC smaller, adjusted for inflation, than it was when Republicans passed their giant 2017 tax bill.) The impact of the CTC on childhood poverty was actually two percentage points lower in 2025 than the year before.
This is in part because OBBBA did not address any of the problems that keep CTC away from millions of children in the lowest income households. Any serious attempt to help working families would have included at least some of the proven solutions that helped slash child poverty in 2021.
The new Census data show the enormous impact that refundable tax credits have on poverty – particularly child poverty. The next time Congress considers proposals to help the families in their states and districts, rather than the owners of big banks and AI companies, expanding these credits must be paramount.
