More than one in four Mississippi children—including two-fifths of Black children—are living in poverty. It’s the highest percentage in the U.S., which as a country has one of the highest child poverty rates in the wealthy world.
That’s finally about to change. Last week, 360,000 Mississippi families received their first monthly payout of the revamped and expanded federal Child Tax Credit, which researchers predict will cut America’s child poverty rate in half.
What is the Child Tax Credit?
As of July 15, tens of millions of American families began receiving direct monthly payments through the expanded and revamped federal Child Tax Credit program. Instead of claiming a $2,000 tax credit at the end of the year, families will now receive a direct monthly payment of up to $300 a month for children under 6 years old and up to $250 per month for children ages 6-17. The yearly benefit of the program has been expanded to $3,600 per child under six years old and $3,000 for those ages 6-17. Families are eligible for the credit if their joint income is under $150,000, and under $112,500 for a single-parent household.
These payments will be sent out by the IRS in the form of a check or direct deposit. Families that have filed tax returns for 2019 or 2020, or those that received stimulus payments, will be automatically enrolled for the tax credit. Families who have not made enough to file taxes are eligible and can enroll here.
What does it mean for Mississippians?
This year, $153 million will go to support 595,000 children and 360,000 families in Mississippi. The increased Child Tax Credit program has the power to lift countless children—in our state and across the country—out of poverty by providing families with additional resources to spend how they see fit.
Poverty can be traumatic at any age, but it can be especially pernicious in life’s formative years. A growing body of research has shown the toll that poverty can take on developing bodies and minds. Children in poor households are at higher risk of hunger and malnutrition, exposure to lead and other pollutants, and illness and chronic disease. And because poverty is often concentrated by neighborhood, it means local public services are often underfunded or inaccessible. In Mississippi–where the chances of a child rising out of poverty by adulthood are among the lowest in the country–the cycle of poverty is perpetuated by systems that bind rather than liberate. Children living in poverty are more likely to drop out of school, have trouble finding steady employment, and have some experience with the criminal justice system. Children living in poverty also experience developmental stressors that last into adulthood, increase the odds of severe health complications (i.e. heart disease, obesity, cancer, stroke), and affect not only personal well-being but communities as a whole.
For many households, the difference in a few hundred dollars per month means an escape from this cycle—the opportunity to provide children with more nutritious food, to pay for childcare while at work, to save for future expenses. And it offers a measure of relief from the chronic stress that is a symptom of financial instability and insecurity.
The impact of no-strings-attached funding for low-income Mississippi families has been demonstrated by groups like Springboard to Opportunities, a Jackson-based nonprofit. In 2018, the organization began an experiment called Magnolia Mother’s Trust that provided low-income, Black mothers in Jackson with $1,000/month for 12 months, with no stipulations. The experiment, designed to prove that giving low-income mothers additional resources to care for their families lifts entire households out of poverty, has shown exactly that. Not only did participating mothers see an increase in the ability to pay their bills on time, from 27% to 83%, an increase in mothers with savings for emergencies from 40% to 88%, and an increase in the ability to have enough money for food from 64% to 81%, mothers were able to meet the basic needs of their families as well: healthcare, transportation needs, and support for education.
Following the COVID-19 pandemic and the economic burden placed on countless Mississippi families, this credit offers a lifeline, with the potential to impact communities similar to the outcomes from the Magnolia Mother’s Trust experiment. The impact of direct payments given to families cannot be underestimated: empowering families to consider their finances in a way that is proactive rather than reactive. It has the potential to disrupt the cycles of poverty that ravage our state.
Note: Currently, this increased benefit is set to last for the remainder of 2021, with a proposal by President Biden to permanently increase the benefit as part of the American Families Plan.