Senate Bill 641: Reenact Child Tax Credit
A common-sense tax credit to reduce child poverty with high returns on investment for NC
SB 641 Summary: This bill would establish a fully refundable state Child Tax Credit (CTC). NC families would receive a tax credit for each child in the amount of $1,900 for children ages 6 and under and $1,600 for qualifying children ages 7 and up.
This generous and refundable child tax credit would help NC kids thrive
- Nearly 1 in 5 children live below the poverty line in North Carolina. In 2021, temporary expansion of the federal CTC slashed poverty in our state by more than 40 percent.[1] This state proposal would reduce child poverty by more than 25 percent.
- Child poverty carries enormous economic costs for society in the form of lost productivity, increased health and crime costs, and increased costs associated with homelessness and child maltreatment.[2]
- Low-income families that receive a CTC spend the bulk of the tax credit on basics like childcare, housing, food, and school supplies.[3] These tax credits are linked to improved infant and maternal health, better school performance, and greater lifetime earnings.[4]
A generous and refundable child tax credit is a better investment than corporate tax giveaways
- The North Carolina corporate income tax rate has been reduced over time and is scheduled to be fully eliminated by 2030. This state CTC proposal costs roughly the same amount that lawmakers plan to give away to big corporations in tax cuts.
- Tax cuts for corporations and the wealthy have failed to deliver on promised results for NC families. Spending that money on a CTC instead would boost local economies, help families afford the basics, and provide long-term benefits.[5]
More about SB 641
- The credit is fully refundable, meaning that if a family owes less in taxes than the value of the credit, they will still receive the full credit.
- The credit amount begins to phase out as a family’s income increases, consistent with the phase-out of the federal Earned Income Tax Credit.
[1] povertycenter.columbia.edu/publication/2023/state-level-impacts-of-2021-child-tax-credit
[2] academic.oup.com/swr/article-abstract/42/2/73/4956930
[3] equitablegrowth.org/working-papers/spending-responses-to-the-child-tax-credit-expansions/
[4] www.cbpp.org/research/eitc-and-child-tax-credit-promote-work-reduce-poverty-and-support-childrens-development
[5] A cost-benefit analysis of a similar CTC in New York State found a value to society equal to over 9 times the annual costs of the CTC: povertycenter.columbia.edu/publication/2021/child-allowance/cost-benefit-analysis-new-york
