Every child, regardless of their background or ZIP code, deserves a decent start to life, which means that families must have the basic ability to put food on the table and provide for their children. Americans are working hard just to get by, but wages have failed to keep pace with productivity as wealthy corporations refuse to pay people the true value of their work, while the cost of living keeps rising. For too many people, working forty hours each week is no longer a guarantee that they can provide for their family.

New data released today from the U.S. Census Bureau underscores that many families are struggling financially. And they reveal gaping holes in our nation’s economic support system, particularly for the 13.4 percent of children who lived in poverty in 2024. Unfortunately, the Trump administration’s megabill will deepen child poverty in the coming years, in contrast to the expanded Child Tax Credit (CTC) that temporarily cut child poverty in half in 2021.

For policymakers, these stark child poverty numbers should be a threefold call to action. First, we need wages to reflect the true value of work. Second, we need a strong care infrastructure that supports families’ needs across generations. Finally, we need cash assistance for families with children to be part of our safety net—whether it’s a robust, fully refundable advance CTC, a child allowance as in many countries such as Canada and Germany, or a guaranteed income policy. Cash assistance is particularly urgent amid low wages and inadequate care infrastructure. Ultimately, we need all three elements for children and families to thrive.

Here’s more about the cash part of the story.

The expanded CTC dramatically cut child poverty in 2021. Trump’s megabill will do the opposite.

Our leaders have a choice to enact policies that ensure that every child in America can thrive. Instead, too many children grow up with financial challenges that hurt their well-being and hold them back in the future. Improving children’s futures should be enough of a reason to invest in their well-being, but it is also true that child poverty has economic costs that impact everyone. The costs of child poverty—from lower workforce productivity to higher health costs and more—total well over $1 trillion per year, or more than 5 percent of U.S. gross domestic product (GDP). In other words, addressing child poverty will also boost overall economic growth.

Yet, today’s Census data show that in 2024, 13.4 percent of U.S. children under 18—9.7 million children—lived in poverty, based on the Supplemental Poverty Measure, researchers’ preferred measure of poverty that accounts for taxes and transfers.

Child poverty is not inevitable—it is a policy choice. In 2021, the United States briefly but historically cut child poverty nearly in half by expanding the CTC in the American Rescue Plan Act (ARPA). The ARPA CTC expansion significantly increased the value of the existing credit (from $2,000 per child to $3,600 for children under age 6 and $3,000 for children ages 6 to 17); made the credit refundable, so that its full value reached millions of low-income children who were previously excluded; and delivered the first half of the credit in monthly payments from July to December 2021 (with the remaining half delivered in a lump sum at tax time). The expanded credit successfully reached the vast majority of eligible children, with 62 million children receiving payments.

Research shows that the ARPA CTC successfully drove a 46 percent reduction in child poverty in 2021 compared to 2020, with 90 percent of the drop directly attributable to the expanded CTC. Sadly, after reaching a historic low of 5.2 percent in 2021, the child poverty rate shot up to 12.4 percent when Congress failed to extend the expanded credit, leaving more than 5 million more children living in poverty in 2022 than in 2021.

If the 2021 ARPA CTC expansion had been in place in 2024, the child poverty rate would have been 8.8 percent instead of 13.4 percent, with 3.3 million fewer children living in poverty, according to new analysis by Columbia’s Center on Poverty and Social Policy (CPSP).1 In fact, a permanently expanded CTC modeled after the 2021 law would yield $10 in social and economic benefits for every dollar spent—a return on investment (ROI) of 10 to 1, according to a 2024 economic study.

If the 2021 ARPA CTC expansion had been in place in 2024, the child poverty rate would have been 8.8 percent instead of 13.4 percent.

By contrast, President Trump’s megabill made only meager changes to the CTC—and those changes exclude the poorest 19 million children. If Trump’s changes had been in place in 2024, CPSP finds that there would have been no change in the child poverty rate; it would have remained at 13.4 percent. But even that is far rosier than reality, because at the same time, the megabill’s massive cuts to health care and food assistance will dramatically increase financial hardship for families with children, far outweighing the impact of the megabill’s CTC changes. Trump’s megabill will leave families in the bottom decile of the income distribution worse off by $1,200 per year over the next decade, according to the nonpartisan Congressional Budget Office.

Guaranteed income (GI) programs also demonstrate that cash matters for families with children.

The advance monthly payments from the 2021 CTC demonstrated the important role cash assistance can play for U.S. families with children. Similarly, guaranteed incomes (GIs) are a related policy that provide targeted unconditional cash transfers at regular intervals (often monthly or biweekly). Unlike CTCs and child allowances, GI policies do not necessarily target families with children alone, but research shows that GIs can also successfully achieve goals such as reducing child poverty and stabilizing incomes for participating families with children.

For instance, the guaranteed income created by Alaska Permanent Fund Dividends for the past forty years reduced poverty by 20 to 40 percent among Alaskan families—and 50 percent among Alaskan children—while a similar GI from casino dividends reduced poverty among families in the Eastern Band of Cherokee Indians by an estimated 35 percent in the mid- to late 1990s. Since 2017, according to the Robert Wood Johnson Foundation, more than 150 GI pilots and programs have launched nationwide, with variation in the value of the cash transfer as well as program location, size, and targeting. Studies of these individual programs, such as the Denver Basic Income Project and Magnolia Mother’s Trust, find sizable improvements in financial well-being and stability.

Cash transfer policies have a broader impact.

Multiple studies of cash transfers to families with children also examine outcomes beyond poverty and income. For example, some research from the United States and other countries finds that these policies may also increase food security, boost child health and development, and increase investments in children, although results are mixed. At the same time, contrary to concerns from critics that cash transfers could cause families to work significantly fewer hours, research suggests policies such as the ARPA CTC have little or no effect on families’ labor supply, meaning the income increase from the transfer is not offset by a decrease in earnings for the typical family.

Recently, one study designed to explore the link between cash transfers and children’s development outcomes—such as language, high-frequency brain activity, and social-emotional problems—has received significant attention. In the Baby’s First Years study, researchers did not detect significant differences in several metrics of development between children whose mothers received the higher payments compared to those who received the lower payments; however, they did find that mothers in the treatment group spent more time on enrichment activities and more money on child-related goods. At the same time, despite the concerns expressed by opponents, these mothers did not work less nor spend more money on goods such as alcohol or cigarettes—findings that are consistent with a large body of international studies. Some experts caution against drawing strong conclusions based on a single study—particularly given its timing during the pandemic. The pandemic was disruptive in many ways, including that it directly impacted child development and well-being. In addition, pandemic relief programs such as stimulus checks, unemployment assistance, and the 2021 ARPA expanded CTC itself were delivered at the same time, and likely helped all of the families in both the treatment and control groups.

In the coming years, several ongoing pilot programs are expected to yield additional research on the effects of cash transfers beyond poverty and income. For example, Rx Kids, a large Michigan pilot launched in January 2024 that provides $1,500 in mid-pregnancy and $500 per month for the first twelve months of life, is already showing strong impacts on maternal mental health and well-being, as well as on family financial security.

Looking Ahead

Further research may uncover more answers—and perhaps additional questions—about the impacts of CTCs, GIs, and other cash transfer policies on outcomes such as children’s brain development and parental stress. Policymakers and advocates should not lose sight of the key lesson from the historic 2021 ARPA CTC expansion: A robust cash benefit that is fully available to all low- and moderate-income families with children has the potential to dramatically reduce child poverty, helping give all children in our nation the chance to thrive.

Notes

  1. While the Census Bureau reports a child poverty rate of 13.4 percent in 2024 based on its detailed internal data, calculations using the Bureau’s public use data files, including those by CPSP, round to a slightly lower number (13.3 percent).