According to the U.S. Census Bureau, 3 in 10 families that received monthly Advance Child Tax Credit payments in 2021 spent them on kids’ school expenses; and 1 in 4 families with young children used them to cover child care costs.
Several changes were made to the child tax credit as part of the American Rescue Plan Act of 2021, COVID-19 relief legislation that was signed into law in March. The program provides the tax credit to all parents with children, including those who are not required to file a federal tax return. The credit was increased — up to $3,600 per year for children ages 5 and under at the end of this year; and up to $3,000 a year for those ages 6 to 17, on a sliding scale based on income. Half of the annual credit amount is being paid out in advance through the monthly checks.
The IRS began issuing a monthly Advance Child Tax Credit payment to families with children in July 2021 and the Census released information regarding how families used the first three checks. According to the IRS, about 35 million eligible families received up to $300 for each child under age 6; and up to $250 for each child ages 6 to 17 in July, August, and September. These payments will continue every month through December.
Census researchers surveyed adults in households and asked whether they had received a CTC payment within the last four weeks. If they had, they were then asked to identify whether they mostly spent the CTC, mostly saved, or mostly used it to pay off debt.
About 4 in 10 of those households said they mostly used the checks they had received to pay off debt.
Adults who reported receiving a CTC payment were also asked about what they spent the money on, allowing them to pick multiple choices from rent to groceries. The majority of survey respondents reported spending their CTC checks on more than one thing. Several choices were school-related expenses, including books and supplies, tuition, tutoring services, after-school programs (other than tutoring and child care) and transportation to/from school. By late September, adults in households that received the CTC were less likely to spend part of it on school-related expenses than early in the month.
Only 1 in 10 households reported using the CTC for child care expenses.
Around half of the CTC recipients reported spending at least part of basics such as food, rent, mortgage or utilities.
The survey was conducted as part of a study on how the pandemic is affecting Americans’ lives. Information on the methodology and reliability of these estimates can be found here. Data users interested in state-level sample sizes, the number of respondents, weighted response rates and occupied housing unit coverage ratios can consult the quality measures file available at the same location.
Data courtesy of Daniel J. Perez-Lopez and Yerís Mayol-García, survey statisticians in the Census Bureau’s Social, Economic, and Housing Statistics Division.
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