WI22-05: Social Security Interactions with Child Tax Credit Expansion

Abstract

The American Rescue Plan Act (ARPA) of 2021 significantly expands the Child Tax Credit (CTC), increasing the number of eligible children and payment amounts with advance monthly payments that began in July 2021. The expanded CTC will benefit 90% of children, including up to 14 million children living with grandparents and other relatives, many of them poor without the added CTC benefits . Many Social Security program participants are newly CTC eligible and tax filers with eligible children may receive a maximum CTC amount of $3600 per child for 2021. CTC payments have significantly reduced poverty and food insufficiency among families with children in the initial months of the expansion without negative effects on labor market outcomes. Using Current Population Survey and Survey of Income and Program Participation data, this project will simulate CTC eligibility and its effects on income and poverty among Supplemental Security Income (SSI) child beneficiaries, and SSI, Social Security Disability Insurance, or Old Age and Survivor Insurance adult beneficiaries with dependent children following the CTC expansion. ARPA changed several CTC program rules that expand eligibility, especially its extension of larger benefits to those with zero or low earnings. These changes have contributed to distributional differences in program effects by demographic subgroups and geography, which we will examine in detail. The findings from this project will offer evidence on the beneficial interactions between CTC and Social Security Administration (SSA) administered programs.