Fact Sheet: Kids and the American Rescue Plan
Child Care Early Childhood Education Federal Budget Health Housing & Homelessness Nutrition Poverty & Family Economics Tax Policy
The American Rescue Plan marks the biggest policy gain for children in the United States in decades.
The comprehensive COVID-19 relief package passed by Congress in March devotes more than $100 billion to the needs of children, whose lives have been derailed by the pandemic and its social and economic aftermath. In particular, the American Rescue Plan will cut child poverty by more than half in 2021 alone and has created momentum to eradicate it altogether.
Among the American Rescue Plan’s most important provisions for children:
Tax Code improvements (one year only):
- Child Tax Credit: Increased from $2,000 to $3,000 ($3,600 for children < 6); extended to low and no-income households; distributed monthly v. annually
- Child and Dependent Care Tax Credit (CDCTC): Credit rate increased to 50% (from 35%); phaseout increased to $125,000 (from $15,000); eligible child care expenses increased to $8,000 for one child and $16,000 for two (v. $3,000/$6,000)
- Earned Income Tax Credit (EITC): Credit rate and maximum credit for childless workers increased; qualifying age dropped to 19 years old (from 25) for the general population; to 18 years old for former foster youth and homeless youth.
Child Care funding: Hits $50 billion, the amount requested by advocates to meet urgent needs, including $1 billion each for Early Head Start/Head Start and Tribal child care programs.
Homeless Youth services: $800 million devoted to provide homeless children and youth with wrap-around services to mitigate pandemic impacts.
New stimulus payments: Qualified individuals receive $1,400 recovery rebates, including all dependents, regardless of age. All qualified children with a Social Security number receive payments, regardless of their parents’ immigration status.
Expanded nutrition benefits: Extends through September 2021 a 15% increase in Supplemental Nutrition Assistance Program (SNAP) benefits, including $1 billion for programs in the territories, and ensures Pandemic-EBT for the duration of the pandemic, including over the summer.
K-12 Education supports: Calls for more than $125 billion to help reopen schools, 5% of which must be used to address learning loss through evidence-based interventions such as summer learning, extended day, comprehensive afterschool programming, and others. More than $7 billion is allocated to shrink the digital divide, which affects nearly 17 million children.
Child Poverty: In addition to the expansion of the Child Tax Credit, the package designates $1 billion to be allocated among each state, tribe, and territory to provide assistance to needy families so that children may be cared for in their own homes or in the homes of relative.
Support for Native institutions: Invests $31 billion in Native communities to combat COVID-19, stabilize Tribal community safety-net programs, and improve Native health systems.