The federal expanded child tax credit (CTC) popular during the COVID-19 pandemic expired and hasn’t returned. But the expanded benefit, which in many cases included advance monthly tax credit payments of up to $300 per qualifying child, benefited families in the United States. Government data show that 2.9 million children were lifted out of poverty due to the expanded federal CTC.
Lawmakers previously reached a tax deal, which included a new child tax credit that would have partially restored the expansion, but the deal stalled in the Senate and has not passed. It's not clear whether a federal expanded CTC will become law in time for the 2025 tax filing season. However, at least nine states implemented their own expanded child tax credits. Here’s what you need to know about those.
State expanded child tax credits
Minnesota enacted a child tax credit last year worth up to $1,750 per qualifying child. That amount is higher than the child tax credits offered in other states.
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Minnesota legislation leaves open the possibility for advance payments in future years. That means eligible families in Minnesota could receive part of the state child tax credit before filing their Minnesota state tax returns.
Previously, in New York, children under the age of four didn’t qualify for the state’s child tax credit. However, an expanded New York child tax credit changed that to include all children up to age 17. The law became effective last year.
The state's child tax credit is worth up to $100 per eligible child or 33% of the federal CTC (currently up to $2,000 per child) and the federal additional CTC claimed, whichever is greater.
Colorado increased its state child tax credit to a maximum of $1,200 per child. Colorado’s expanded CTC goes into effect for the 2024 tax year, so eligible families will receive the larger credit in 2025 when they file their 2024 Colorado state tax returns.
The California Young Child Tax Credit allows eligible families with as little as $1 and as much as $30,000 in earned income to claim the credit, which is worth up to $1,083 per tax return. These numbers may be adjusted for the 2024 tax year.
An Oregon child tax credit enacted last year, known as the Oregon Kid's Credit, allows eligible families to claim up to $1,000 per child. A provision in the bill allows the possibility for advance payments in the future.
Utah approved a non-refundable child tax credit worth $1,000 per child under the age of four. The measure takes effect this year (for tax returns filed in early 2025).
Maryland, Massachusetts, Vermont, New Mexico, and New Jersey have made their child tax credits refundable, meaning eligible families may receive the credit amount back as a tax refund when they file their year-end state tax returns.
With expanded state child tax credits gaining popularity, it is possible that more states will pass legislation to offer expanded state child tax credits of some kind.
Why child tax credits matter: Impact of the expanded federal CTC
The U.S. Census Bureau studied the pandemic-era federally expanded child tax credit and found that “the Child Tax Credit lifted 2.9 million children out of poverty.”
- The federal expanded child tax credit allowed families to claim fully refundable credits for dependent children up to age 17.
- Making the credit fully refundable allowed eligible households to receive the amount of the credit back as a tax refund.
- The 2021 expanded child tax credit increased the credit from $2,000 per eligible child to $3,000 for children ages 6 to 17 ($3,600 for children under 6).
- And, rather than waiting to get the credit when filing federal tax returns, many families received part of the expanded child credit through advance monthly payments.
However, the positive impact of the temporary federal child tax credit didn’t last, because the credit expired. Various studies found that the expiration of the federal expanded child tax credit negatively impacted families with lower incomes.
For example, one such study revealed that the expired extended credit resulted in a 25% increase in food insufficiency among families with children. According to the study, the alarming increase in food insecurity was reached by July 2022, not even one full year after the expanded federal child credit expired.
While newly expanded state child tax credits aren’t expected to provide the drastic positive results that the pandemic-era federal credit produced, many families could still benefit.
- For example, the Minnesota state child tax credit is expected to reduce child poverty in the state by 33%, according to information provided on Gov. Tim Walz’s website.
- New York’s expanded child tax credit will reportedly benefit 900,000 more children by including children up to age 3.
- The New Mexico expanded child tax credit is expected to benefit an estimated 214,000 families, according to a press release issued by the New Mexico governor’s office.
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