- The first child tax credit payment went out to millions of families last month.
- The new Census Household Pulse Survey gives us a look at how exactly people used it.
- Overall, 27% of adults mostly spent it, 32% mostly saved it, and 40% mostly used it to pay down debt.
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Many Americans didn’t waste any time putting their first child tax credit payment to use.
Millions of eligible families started receiving the first monthly child tax credit payment of up to $300 per child on July 15. The American Rescue Plan expanded the child tax credit temporarily, and families can receive advance monthly payments of the child tax credit for the first time, as opposed to the conventional credit showing up on their annual tax returns.
The newest phase of the Census Household Pulse Survey, an experimental online survey asking people about things like food sufficiency and employment loss to get a sense of household situations amid the pandemic, gives us insight into just how parents spent the first payment.
Overall, based on survey data collected between July 21 and August 2, 67.6% of US adults in households that received a child tax credit payment mostly spent it or mostly used it to pay down debt. This further varies by state, as seen in the map below:
Florida had the highest share, where 77.2% of adults in households that received a child tax credit payment mostly spent it or mostly used it to pay down debt. On the other hand, New Hampshire had the lowest share at 53.6%, where the rest who reported how they used the money said they mostly saved it.
People with different levels of household income also used their payments differently. More adults in lower-income households used the payments to mostly pay down debt, while higher-income households mostly saved it. The following chart shows the share of adults in households that received a child tax credit payment that mostly spent it or mostly used it to pay down debt, broken out by income:
Breaking the results down further, among all adults in households that received a payment, 27% mostly spent it, 32% mostly saved it, and 40% mostly used it to pay down debt. What people spent these payments on varied, including paying for school books and supplies, food, and clothing.
More families were receiving the child tax credit under the temporary expansion of the program in the American Rescue Plan. The expanded plan included a higher annual amount, paying up to $3,000 per child for children ages 6 to 17 and up to $3,600 per child for children under 6.
The expansion also removed the minimum income requirement, which previously required families to make at least $2,500 a year to qualify. It's also fully refundable for 2021. Advance monthly payments are going out for six months, from July to December, and then people can claim the rest when filing their 2021 tax returns.
The expanded child tax credit can help reduce child poverty, according to one study from the Center on Poverty & Social Policy at Columbia University. Even though eligible Americans only received the first payment so far, some positives can already be seen.
"A drop in the number of households with children that reported food insufficiency and trouble paying household expenses may be linked to the child tax credit checks issued last month," Daniel J. Perez-Lopez, a statistician at the Census Bureau, wrote in a blog post about the new survey results.