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A Wave of Child Tax Credits Is Building in the States

Moving From Pilots to Policy, States Expand Valuable Tax Credits Nationwide
3 Min readtime / 05.17.23

In the midst of the current economic challenges Americans face, The Rockefeller Foundation (Foundation) has had the privilege to see glimmers of hope through our support for organizations working to expand the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC). This movement took a big step forward in 2021 with the passage of the expanded federal CTC. Dubbed “a guaranteed income for families with kids,” this expansion lifted 3.7 million children out of poverty, improved rates of household debt and food insufficiency, and helped parents get back to work during some of the toughest pandemic months.

All of this was made possible through small, but significant changes in the tax code. The pandemic-era decision to make these federal tax credits fully refundable, with income requirements removed, created a cash benefit that acknowledged all the kinds of work that people are doing, regardless of whether someone collects a paycheck for their efforts. These expansions have the potential to create a more just and secure economy for low- and middle-income Americans, especially for people of color.

The federal CTC expansion has expired, despite a furious public education campaign by an aligned group of organizations through the end of last year. These efforts continue, at a slower pace in light of the intricacies of working with a divided government in Washington, and the President touted the CTC success in his State of the Union speech again this year.

Yet, inspired by this momentary federal breakthrough, state legislatures are proving the popularity of cash policy and the power of a diversified, long-view investment strategy.

The Foundation’s funding laid the groundwork through state portfolios that elevated tax policy research and nurtured public support. The Foundation’s former grantee Economic Security for Illinois and a diverse set of partners helped pass a massive EITC expansion last year, a benefit that 4.5 million Illinoisans will enjoy. The reforms to the state credit will ensure hard working families most in need can benefit. Through a robust campaign led by a multi-racial and diverse coalition, their advocacy expanded the age of eligibility to include all workers from 18 and older, including those who are not eligible for a Social Security number and file their taxes with an ITIN and increased the value to 20% of the federal credit.

In Washington state, former grantee Statewide Poverty Action Network co-led a coalition for tax fairness in a state characterized by an unequal tax code. The result: a new Working Families Tax Credit which will result in 400,000 Washington families receiving $1,200 cash and began to be delivered to tax filers in recent weeks. The same groups passed a further expansion just this month, making the new credit more easily available to domestic violence survivors.

Gradually, these state by state investments have formed a network of local policy experts, advocates, elected officials, and grassroots organizers to pick up where the federal government left off. Now, the wave is set in motion, and more than 20 states are working to create new or significantly expanded state CTCs this year, with several more pushing for bold EITC expansions.

  • Map of states that are expanding tax credits.

The Foundation’s grantee Economic Security Project’s (ESP) Pilots to Policy state fund is helping to spur this wave of action,  encouraging “inside” groups (budget and policy organizations) and “outside” groups (grassroots advocates) to collaborate and join forces to advance tax credits like the CTC and EITC in states. The support ESP provides includes connecting these groups to funding, providing strategic advice, offering communications and policy backup, and connecting state-level coalitions to the broader national network of groups fighting for bold cash ideas.

The goal is clear: win state-level tax credits and put more money in people’s pockets. When policy benefits are direct, visible, and regular in people’s lives, state governments get the credit. By expanding the tax code to distribute cash in the form of refund checks, it demonstrates the benefits that cash delivers, paving the way for a political environment that will enthusiastically support moving cash to low- and middle-income people.

The first successful expansions of the year—brand-new CTCs in Utah and Maryland, a CTC in New Mexico tripled in size, a major CTC expansion in New York to include very young children for the first time, and significant EITC expansions in Michigan and Hawai’i—reinforced that this is not a partisan issue, but that helping working- and middle-class families can be a unifying goal.

During Women’s History Month, as groups across several states shared the stories of mothers during the new year’s first legislative sessions. On the ground, state advocates amplified the call, “Moms Deserve the Credit,” to emphasize the sheer volume of unpaid, invisible work moms provide as caregivers, and, in turn, the long-term financial stability that cash payments could offer their families.

  • In Hawaii, advocates rallied behind an expansion of their state CTC. They recorded a video and gathered in Honolulu in support of the “Keiki Credit.”
  • In New Jersey, advocates held a petition drive in support of tax fairness: doubling the CTC, making it more inclusive of undocumented immigrants, and making wealthy corporations pay their fair share in taxes.
  • In Vermont, organizers set up public spaces where families shared stories about how the state’s CTC has helped them to get ahead.
  • In Utah, organizers hosted a phone banking day in support of a new “pro-family” CTC.
  • In California, advocates organized a social media day of action and mother of three Reyna Bonilla Palacios and Assemblyman Miguel Santiago published an op-ed in La Opinión about the efforts to expand the state’s existing Young CTC to more families. In Illinois, advocates and neighbors held a rally at the Bronzeville Children’s Museum in support of expanding their state CTC.
  • In New York, single mother Candace Cabral published an op-ed in support of an expanded CTC, highlighting how the cash would help pay for childcare and give moms like her more opportunities to return to the workforce.

Similar efforts are in progress in states including Arizona, Connecticut, Washington DC, Indiana, Massachusetts, Minnesota, Montana, Nebraska, Pennsylvania, Rhode Island, Virginia, Washington, and West Virginia. Through these bills and proposals, we have a tremendous opportunity to take a step towards an economy that works for everyone. States have picked up where Congress left off and are proving the power of cash to renew the fight

Economic Security Project advocates for ideas that build economic power for all Americans. We legitimize bold ideas by supporting cutting edge research and elevating champions, win concrete policy victories for the communities that need to see change now, and provoke the conventional wisdom to shift what’s considered possible. Our team of academics, organizers, practitioners, and culture makers disburse grants, run issue campaigns, develop creative interventions and research products, and convene to encourage investment and action from others.

The Rockefeller Foundation

As a charitable private foundation, The Rockefeller Foundation does not engage in or support lobbying or political campaign activities, as described in the U.S. Tax Code.

Additional resources:

https://economicsecurityproject.org/resource/a-ctc-eitc-wave-in-the-states-pilots-to-policy-briefing/

https://economicsecurityproject.org/news/states-step-up-to-show-moms-deserve-the-credit/

https://economicsecurityproject.org/resource/ctc-report/

https://economicsecurityproject.org/campaign/state/

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