Child Poverty Fell to Record Low 5.2% in 2021

In 2020, the two child poverty measures began to diverge due to the impact of large anti-poverty programs established or expanded in response to the COVID-19 pandemic, such as the stimulus payments, expansions to SNAP, and the Child Tax Credit (CTC).

In 2021, the child poverty rates for four race and Hispanic origin categories examined were at their lowest since 2009 (Figure below). 

Some of these additions and subtractions (for the total population and three age groups) in 2021 are shown in the figure above. Additions include cash benefits like Social Security, also included in the official poverty measure, as well as noncash benefits and tax credits (like SNAP, school lunch programs and the Child Tax Credit) only in the SPM.

A key component of the 2021 American Rescue Plan Act (ARPA) was the CTC expansion. ARPA increased the value of the CTC from $2,000 to $3,600 for children under 6 years of age and to $3,000 for children between ages 6 and 17. The credit was made fully refundable and no longer limited by the taxpayer’s income tax liability.

In 2021, the CTC lifted 5.3 million people out of poverty, including 2.9 million children (Figure below).

Children lifted out of poverty due to the addition of the CTC include (Figure below; Table 1):

• 1 million children under 6.
• 1.9 million children between the ages of 6 and 17.

The inclusion of the CTC significantly decreased the number of children experiencing poverty across several race and Hispanic origin groups (Table 1).

The CTC reduced the Black child poverty rate by 6.3 percentage points, from 14.5% to 8.1% when included in SPM resources. Overall, this amounted to approximately 716,000 Black children lifted out of poverty by the inclusion of the CTC.

Similarly, the CTC reduced the Hispanic child poverty rate by 6.3 percentage points (not statistically different than the change in the Black child poverty rate), representing 1.2 million Hispanic children. The CTC also removed 820,000 White, non-Hispanic children and 110,000 Asian children from poverty. 

The CTC significantly reduced the proportion of children in the two lower income-to-poverty ratio groups by:

• 1.1 percentage points to 1.4% in the lowest income-to-poverty ratio category (those with income less than 50% of the poverty threshold).
• 2.8 percentage points, from 6.6% to 3.8% for those with resources between 50% and 99% of the poverty threshold. 

While not captured in the SPM rate, the CTC also reduced the share of individuals slightly above poverty. The percentage of children in near poverty (100% to 149% of the poverty threshold) declined 6.0 percentage points from 18.1% without the CTC to 12.1% with the CTC.

The CTC also had an impact on people in higher income-to-poverty ratio categories.

For instance, including the CTC increased the share of individuals in the second-highest income-to-poverty ratio category (200% to 399% of the poverty threshold) by 5.8 percentage points to 44.1%.

ARPA greatly expanded both eligibility and the value of the CTC. While the previous analysis looked at the full impact of the CTC, which lifted 2.9 million children out of poverty, Table 2 shows how much of that was due to expansion of the CTC. It shows the expansion prevented 2.1 million of those children from falling into poverty. 

Kalee Burns is an economist and Danielle Wilson is an intern in the Census Bureau’s Poverty Statistics Branch.

Liana E. Fox is the assistant division chief for Economic Characteristics.