A number of states, including Colorado, Illinois, New York, Utah, and the District of Columbia, have started new programs to help families with children get more money. Let us talk about these current events and what they mean.
The EITC in Colorado has been increased to meet 50% of the federal credit for the 2024 tax year. This is a big step forward. This increase gives low- and middle-income families a big boost, which makes their finances safer.
The state also created the Family Affordability Tax Credit, which gives up to $3,200 per child during times when the economy is doing well. This credit adds to benefits that are already available, making sure that families get enough help.
Illinois’ New Benefit
Illinois has added a new child benefit for families with kids younger than 12 years old. It will take some time, but this plan will increase the state’s Earned Income Credit by 40%. It will start out at a 20% increase in 2024. This move shows that Illinois is serious about making families’ finances better and lowering kid poverty.
New York keeps up its practice of being the first to pass child tax laws. In 2024, the state will give the Empire State Child Tax Credit a one-time boost. This will make sure that families who apply get extra help. This increase goes along with the state-level credits that are already in place and shows how serious New York is about helping families.
Utah’s Inclusion
It used to only be for kids younger than three years old, but now Utah has made the Child Tax Credit available to kids aged four. This change expands the types of help that families can get, which can help them deal with the costs of child care and early education.
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Washington and Minnesota’s Innovations
Washington’s EITC model is special because the state does not have a phase-in income requirement for this credit. This means that a wider range of residents can get it.
In the meantime, Minnesota has changed its Working Families Credit to work with the new state CTC. This makes it easier for people to start and stop getting benefits.
The goal of this restructuring is to make sure that working families get the best help possible.
State Initiatives and Federal Context
When the increased federal EITC and CTC provisions under the American Rescue Plan Act ran out in 2022, states stepped up their work.
In the years since then, 12 states plus the District of Columbia have either started or grown their CTCs. For EITCs, 17 states have done the same.
These acts show that states are becoming more determined to fill in the gaps left by the federal government and keep helping families in need.
Child and Dependent Care Credits (CDCTCs)
States have also paid attention to Child and Dependent Care Credits (CDCTCs), which are different from CTCs and EITCs.
These credits help families by paying for some of the costs of child care. This year, states like Kansas, Colorado, and Wisconsin have made their CDCTCs bigger, which helps working parents even more.
Understanding CDCTCs vs. CTCs
It is very important to tell the difference between CDCTCs and CTCs. Families have to pay for CDCTCs up front because they are refunds for childcare costs.
CTCs, on the other hand, give you a bigger tax return and let you spend whatever you want, giving you more financial freedom.
This difference is very important for families who are budgeting their money because it changes how they can use the rewards they get.
Many states are working together to make CTCs, EITCs, and CDCTCs bigger. This shows that more people want to help families financially.
As these policies continue to change, they are very important for lowering child poverty and making sure that everyone in the country has enough money.
FAQs
Why do you need Child Tax Credits (CTCs)?
CTCs give families with children a bigger tax return, which lets them spend the money however they want.
What is the difference between Child and Dependent Care Credits (CDCTCs) and CTCs?
CDCTCs pay for child care costs, while CTCs give you a general tax return.
What is the new benefit that Illinois added in 2024?
Illinois added a new benefit for children that made the state’s Earned Income Credit better.
How has Utah made the Child Tax Credit bigger?
Utah’s Child Tax Credit now covers kids who are four years old.
What makes the EITC in Washington different?
Washington’s EITC does not have a phase-in for salary, so a lot of people can get it.
