New KIDS COUNT® Policy Report Recommends Strengthening Tax Credits to Help Young Parents and Their Children Thrive
September 26, 2018Print
By Lauren Pescatore
In a new KIDS COUNT® policy report, the Annie E. Casey Foundation examines the barriers young families face and potential solutions that can help them thrive — including expanding the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) to help young parents achieve financial stability.
According to Opening Doors for Young Parents, 3.4 million children in the U.S. live with parents between the ages of 18 and 24. And while nearly 70% of children with young parents live in families with incomes less than 200% of the federal poverty level, many anti-poverty programs — including most tax credits — exclude young parents due to age limits and other restrictions.
Currently, noncustodial parents are prohibited from claiming the federal EITC until the age of 25, despite the fact that many are providing financial support for their children. The report calls on Congress to lower the EITC’s age limit for workers without dependent children to 21 to help noncustodial parents contribute to their children’s economic security. It encourages states to do the same, following the examples of Maryland and California, both of which recently lowered the age limit for their state-level EITCs. The report also suggests increasing the CTC at both the state and federal levels for families with young children, which would disproportionately help young parents.
The transition to parenthood at an early age leaves many young families vulnerable to financial challenges. The report finds that though 61 percent of young parents work full or part time, their median family income is only $23,000, slightly above the poverty level for a family of three. “Jobs that pay a family-supporting wage are increasingly limited and require some postsecondary education or training, arenas often closed to young parents because of the associated costs, coupled with unaffordable or inflexible housing arrangements, lack of child care, rigid hours and other barriers,” the report’s authors write, adding that more than half of young parents are people of color, who encounter additional challenges brought on by discrimination and systemic inequities.
Along with expanding financial supports like the EITC and CTC, the report also recommends creating more opportunities for young parents to pursue education and employment, surrounding them with services that reduce stress and promote child development, and keeping families together to promote success for young parents in public systems.
Economic stability is especially important for the future of the 3.4 million children who live with young parents. A parent’s financial stability in children’s early years is directly linked to outcomes later in life, such as physical and mental health, academic achievement and employment. Expanding tax credits and other financial supports is an investment in both parent and child. For young parents, tax credits can be a boost to economic stability as they navigate the challenging transition to both adulthood and parenthood. For their children, this economic stability can provide a strong start and lifelong benefits.