To provide needed support to more of North Carolina's working families and their children, Congress should act make permanent the recently lowered earnings threshold for the Child Tax Credit and end annual increases.

Overview

The federal Child Tax Credit (CTC) currently provides families with a $1,000 tax credit for each child under the age of 17.  However, current law requires that a family earn at least $12,050 to be eligible for the credit, leaving out millions of poor children.  In addition, that minimum income is continuously adjusted upward for inflation.  The credit rises further out of reach every year for the many working families in low-wage jobs with stagnant earnings.

Did you know?  1-in-5 children under the age of 17 in North Carolina would be helped by lowering the minimum income threshold to $8,500.

Make Permanent the Expansion of CTC Eligibility to $8,500 and End Annual Increases

The Emergency Economic Stabilization Act recently passed by Congress lowered the minimum income threshold to $8,500 for the 2008 tax year.  Nationally, this expansion of eligibility would benefit 13 million children: 2.9 million would become newly eligible and another 10.1 million would see their current credit increase. Advocates are calling on a new Congress and President to make this expansion permanent and end annual inflation increases.

In North Carolina, thousands of families would benefit:

• 96,300 children would be newly eligible for the credit,
  

• 333,700 children would receive a larger credit.

The Center for Budget and Policy Priorities estimates that:

• Some 70 percent of children who would benefit live in families in which a parent works 30 or more hours per week for at least 50 weeks during the year.

• Nearly 1-in-10 children who benefit lives in a family where either the parent or child has a disability

Ending the annual increases for inflation would ensure that families whose real incomes do not rise would remain eligible for the tax credit each year.

Federal CTC Dollars Provide Local Economic Stimulus

The economic downturn and rising costs of gas and food threatens the economic well-being of North Carolina's children, households and communities. Making permanent the expanded eligibility for the federal CTC would provide a much-needed economic stimulus to nearly 380,000 households in North Carolina and their local communities. As of 2005, North Carolina's communities received $894 million in federal Child Tax Credit dollars. Lowering the income eligibility threshold to $8,500 would bring in at least $100 million more.

Child Tax Credit Dollars to North Carolina by Zip Code, 2005

What You Can Do

Call or write your Representative and Senators and ask them to make permanent the recent expansion of eligibility for the federal Child Tax Credit to $8,500 and end annual inflation increases.

For More Information:

Action for Children Child Tax Credit Fact Sheet

13 MILLION CHILDREN WOULD BENEFIT FROM CHILD CREDIT EXPANSION IN TAX "EXTENDERS" BILL: Families of Nursing Home Aides, Cooks, Pre-School Teachers, and Construction Workers Would Get a Boost (Center on Budget and Policy Priorities, July 2008)

The Child Tax Credit Gap: A Snapshot of Families Left Out (First Focus, May 2008)

Earned Income Tax Credit and Child Tax Credit 101 (Center for American Progress, January 2008) 

Claiming the Child Tax Credit (IRS Tax Tip)