Many Adults with Lower Income Prefer Monthly Child Tax Credit Payments

Qualifying lower-income families prefer monthly payments of the child tax credit to help pay for food, rent, childcare, and more.

The Issue

The American Rescue Plan temporarily changed how families received the child tax credit, shifting from an annual refund to a monthly payment. Many families, particularly lower-income families, noted a preference for the monthly payment. How successful monthly payments are in the future will likely depend on how easy enrollment is and whether low-income families will be protected from repaying errantly paid credits.

Key Findings

The following prefer monthly child tax credit (CTC) payments instead of an annual refund:

• More than half (54%) of U.S. families with incomes at or below the federal poverty level (FPL);
  
• 57% of families with incomes between 100% and 200% of the FPL;
  
• 45% of nonelderly adults surveyed across all income levels; and
  
• all adults except those in the highest income bracket surveyed (600% or more of the FPL).

Conclusion

Some evidence suggests that tax refunds—which typically include the CTC for low-income families—were used to purchase basic needs, pay down debt, and pay for items such as health care that families had delayed throughout the year. These findings indicate that a payment delivered more frequently than annually might be beneficial, something policymakers should keep in mind amid rising prices.