Child poverty fell by 46 percent in 2021 amid tax credit expansion

Child poverty in the United States fell by 46 percent in 2021, a record low achieved largely by expanding the child tax credit, according to new data released by the U.S. Census Bureau.

The data shows 5.2 percent of children were in poverty in 2021, down significantly from the 9.2 percent of impoverished children the previous year. 

The figures reflect an alternate scale developed by the bureau, known as the Supplemental Poverty Measure (SPM), that accounts for noncash benefits like housing subsidies, tax credits and federal nutrition assistance. 

Child poverty under the Census Bureau’s official measure declined by only 0.7 percentage points, but the bureau says the scale reflects a limited analysis solely based on pretax cash income.

The bureau attributed much of the decline to the expanded child tax credit, which Democrats through the American Rescue Plan increased from $2,000 to $3,600 for children under the age of 6 and to $3,000 for children between ages 6 and 17. 

Census officials estimate the tax credit lifted 5.3 million people out of poverty in 2021, including 2.9 million children. One million of those children were under the age of six.

“The new data show the significant impact the expansion of anti-poverty programs during the COVID-19 pandemic had on reducing child poverty,” the bureau said in a release.

The expanded credit expired at the end of last year, and a group of six Democratic lawmakers is promoting the new data as reason to extend the expansion. One study estimated almost 4 million children fell into poverty in January after it expired.

The group promoting the data features Sens. Michael Bennet (D-Colo.), Cory Booker (D-N.J.) and Sherrod Brown (D-Ohio), alongside Reps. Rosa DeLauro (D-Conn.), Suzan DelBene (D-Wash.) and Ritchie Torres (D-N.Y.)

“Today’s Census data confirms that the expanded Child Tax Credit worked: it allowed the hard work of tens of millions of parents to pay off and helped them keep up with the cost of living, dramatically reducing child poverty and hunger,” the lawmakers said.

“We should have never allowed this critical program to lapse, and we should not extend corporate tax breaks at the end of this year without also extending the expanded Child Tax Credit,” their statement continued.

The expanded credit reduced the Black child poverty rate by 6.3 percentage points under the SPM scale, with the measure falling to 8.1 percent, lifting 716,000 Black children out of poverty. 

The Hispanic child poverty rate fell by 6.3 percentage points as a result of the credit, representing 1.2 million Hispanic children, according to the data. The credit under the SPM scale also lifted 820,000 white, non-Hispanic children and 110,000 Asian children out of poverty.

The recent decline comes after significant strides in reducing child poverty over the past quarter century, according to an analysis by nonpartisan research group Child Trends. The analysis found improvements in unemployment rates, single mothers’ labor force participation and state-level minimum wage laws all contributed to a 59 percent decline in child poverty from 1993 to 2019.