By Devin Simpson
A new plan to implement a Young Child Tax Credit (YCTC) could bring much-needed relief to low-income families with children under the age of five.
Elaine Maag and Julia B. Isaacs, researchers at the Tax Policy Center, designed the YCTC to help low-income families cover the costs of raising young children. The credit would provide a maximum benefit of $1,000 to eligible families, and would be in addition to the Child Tax Credit (CTC), which also provides a maximum benefit of $1,000. The CTC lifts 3 million Americans out of poverty annually.
Families with young children tend to have lower incomes but higher child care and health care costs. Research has linked income to the development of young children and their long-term life outcomes. Early childhood is a critical time for healthy development and has an impact on various metrics such as health outcomes, academic achievement and future employment success. Researchers believe that this additional credit will help to further offset the cost burdens on low-income families that impact the development of young children.
If enacted in 2017, the credit would provide an additional $18 billion in benefits to low-income families. The credit would be refundable to further benefit extremely low-income workers and their families. Like the CTC, the YCTC benefit would decrease as eligible families’ income increases.
Learn more about the YCTC here.