The Threat of Discontinuing the Expanded Child Tax Credit Could Negatively Impact Millions of Military Families

By Tiffany E. Browne

As Congressional leaders continue to grapple over permanently extending tax credits for working families, the future of those most likely to benefit from the financial relief, including military families, hangs in the balance.  A recent report by the Center on Budget and Policy Priorities (CBPP) reveals that nearly 5 million children within veteran or  active-duty families will be impacted should the expanded Child Tax Credit (CTC) discontinue at the end of this year. Under the American Rescue Plan, the temporary expansion of the CTC aims to reduce child poverty while providing some financial relief to families facing challenges during the COVID-19 pandemic. A critical portion of the provision enables children in families with low or no earnings in the year to receive full credit for the first time. This includes 1 million children in veteran or active-duty households.

According to the Urban Institute, continued expansion of the CTC could have the potential of reducing child poverty by 40 percent in a typical year. Additionally, CBPP notes, because of the expansion, the 5 million children within nearly 2.6 million military families may become newly eligible for the credit or qualify for a larger credit.

Both the CTC and Earned Income Tax Credit (EITC) help military families make ends meet in their day-to-day lives. Before the COVID-19 pandemic, military families were already facing a myriad of challenges related to health, employment, and more. The public health crisis of the global pandemic magnified these challenges and the expansion of the CTC proved to be another lifeline for military families. CBPP has cautioned that if Congress allows the temporary expansion to expire, military families could experience a deep income loss with more than half of their monthly tax credit taken away. This could have a ripple effect on families facing hardships by exacerbating factors contributing to child poverty including unemployment, lack of adequate and affordable housing, and challenges in resource accessibility for individuals with a disability.

Congress is considering extending the expanded provision for another year, however, some Democratic lawmakers are not on board with the idea, including Congresswoman Rosa DeLauro (D-CT), citing that her colleagues could be missing out on a long-term opportunity to lift children out of poverty. DeLauro has argued that a permanent CTC expansion would not only put more money in the pockets of taxpayers, but also “children will learn more and earn more later in life, leading to increases in tax payments; are less likely to be neglected, leading to decreases in child protection costs; less likely to end up participating in criminal activity, leading to savings towards law enforcement; and are likely to be healthier, leading to decreased health care costs.”

For more information about the expanded CTC under the American Rescue Plan click here.