The good news is that 93 percent of Arkansas children should benefit from an expanded federal tax credit for 2021.
That’s better than nine out of 10 of this state’s children whose families will get a little extra tax relief this year.
The bad news is that a lot of those Arkansas low- and moderate-income families really need that financial boost, which was approved earlier this year by congressional Democrats.
The first of six months of direct relief payments were posted to parents’ bank accounts last week. The payments, due on or near the 15th of each month, will stop in December.
Families will get the balance of the credit when they file their 2021 income tax returns next year.
The tax relief, including these monthly advance payments of up to $250 or $300 per child, depending on their age, were made possible by the American Rescue Plan that Congress passed in March without a single vote from a Republican.
Consequently, none of Arkansas’ congressional delegation, all six of whom are Republicans, were responsible for providing this particular relief to families.
For this year alone, qualifying families here and throughout the nation can count on getting up to a maximum credit of $3,600 for each child under 6 years old and $3,000 for each child between 6 and 17 years old. That’s up from what had been a maximum $2,000 child tax credit and is available even to families that don’t owe taxes.
It is money that can buy school clothes and supplies, groceries or pay off bills accumulated during the pandemic when many parents, usually mothers, either lost work or gave up jobs to be home as surrogate teachers for their children.
This is the program the Biden administration has touted as reducing child poverty by half.
“It’s going to spur the largest-ever one-year decrease in child poverty in American history,” said President Joe Biden as the first checks were being direct-deposited into parents’ bank accounts last week.
Nationally, about 15 million households will receive the full credit, with monthly payments averaging $423 per family.
Arkansas children eligible for the tax credits number 661,000.
The reason so many Arkansas children qualify — again, 93 percent of them — is because this state is comparatively poor. But the program’s nationwide reach, according to the White House, is to just under 88 percent of the children in the U.S., which reflects the fact that children have long suffered the highest poverty rate of any age group in the country.
The first set of payments amounted to $15 billion this month in what President Biden has called a “game-changer” for families.
Qualifying households may be headed by an individual filing their returns alone earning under $75,000 a year or a married couple jointing filing taxes and earning less than $150,000.
Those parameters catch an awful lot of Arkansas families. And parents with higher incomes may still be eligible for a smaller child tax credit.
“When I took office, I promised the American people that help was on the way,” Biden wrote in a letter to parents receiving the expanded credit. “This child tax relief payment is one more way the American Rescue Plan makes good on that promise.”
All in all, the timing is good for the families, some of whom are still challenged by the economic effects of the pandemic.
The pandemic is not over, of course, given the surge of cases from the highly contagious delta variant of covid-19 that is spreading through Arkansas and other states.
This week’s plunge in the stock market just confirmed that the economic hardship will apparently continue for families already hard hit through more than a year in the grip of the virus.
Besides struggling to work or seeing their jobs disappear altogether since the start of the pandemic, some of these families now face loo\sing their homes with the impending end of the federal moratorium on evictions.
Plus, Arkansas stopped participating in the $300 weekly federal unemployment assistance supplement last month.
Gov. Asa Hutchinson ended the state’s underwriting because he said the benefits were keeping too many Arkansas citizens from seeking jobs. Arkansas was the third Republican-led state to opt out early.
At the time, Hutchinson said more than 40,000 Arkansas jobs had gone unfilled as recipients relied on federal supplements instead of re-entering the workforce.
The policy shift provided additional economic pressure on affected families, many of whom will now see relief with these expanded child tax credits.
Unfortunately, this is a one-year deal, unless the Congress votes to extend the credit.
Some Democrats are pressing to make it permanent and the Biden administration has suggested extending the expanded child tax credit through 2025, but nothing is promised yet.