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Stimulus Update: 91% of Low-Income Families Are Using the Child Tax Credit for Basic Necessities

AzmanL / Getty Images
AzmanL / Getty Images

According to a new report by the Center on Budget and Policy Priorities, 91% of families with incomes less than $35,000 are using their monthly child tax credit payments for the most basic of necessities, like food, clothing, shelter and utilities, or for education. What’s more, this represents families in every state and the District of Columbia.

See: Child Tax Credit in Danger? Planned Payments Could Be Reduced by 4 Years if Budget Battle Divides Democrats
Find: How to Refinance a Mortgage

The research was conducted using Census Bureau data covering the first three months of payments — July, August and September.

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Among households with incomes below $35,000 who received the child tax credit, a whopping 88% spent their payments on the most basic needs. This category included food, clothing, rent or mortgage and utility bills.

A large portion of participants are also investing the payments into education, the center reported. About 40% of families with low incomes used their monthly child tax credit payments to cover education costs like school books, supplies, tuition, after-school programs and transportation to and from school. In some cases, families used the credit to cover adults’ own education costs, the report said.

See: Fight for Extended Child Tax Credit Intensifies as Democrats Slam Biden’s One-Year Proposal
Find: Millions of Americans Are Still Long-Term Unemployed, but the Number Is Falling

As Claire Zippel, senior research analyst at the CBPP, pointed out, “Many of these households are receiving the full child tax credit for the first time thanks to the American Rescue Plan’s credit expansion.”

The Rescue Plan stimulus relief bill signed into law last year temporarily increased the availability of the credit for the first time, and in a couple of ways. For starters, anyone, regardless of whether or not they pay taxes, can receive the benefit. The only catch is that families must fall under certain income thresholds. This “halted a policy that prevented 27 million children receiving the full credit because their parents earned too little or lacked earnings in a given year,” Zippel added. “Congress should make it a top priority to ensure that the full credit remains permanently available to children in families with the lowest incomes,” a measure she highlights as driving 87% of the expansion’s anti-poverty impact.

This is also the first year that the credit has been made available in monthly payments to distribute half of the full benefit amount in advance.

See: Stimulus Update — The Child Tax Credit Opt Out Deadline is November 4
Find: July’s Child Tax Credit Cut Child Poverty Rate 25%, Which Makes Compelling Case for Extension

Those monthly payments have already made a significant difference on the anti-poverty impact Zippel referenced.

After just the first two payments, in July and August, 3.5 million children were lifted out of poverty, according to the CBPP.

The push to expand the credit and its advance payments, which are scheduled to end with December’s payment, has intensified in Washington. President Biden recently pitched for a one-year extension of the child tax credit as implemented in 2021, but Democrats have pushed back, saying that a more permanent solution needs to be put on the table.

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This article originally appeared on GOBankingRates.com: Stimulus Update: 91% of Low-Income Families Are Using the Child Tax Credit for Basic Necessities