Amid rise in child poverty rates, Maine child tax credit expected to buoy 3,500 youth

More than 1 in 10 American children lived in poverty in 2022 — more than twice as many as the year before — according to data released by the U.S. Census Bureau last week. 

The jump in child poverty rates from 5.2% in 2021 to 12.3% in 2022 coincided with the end of additional financial support parents received from the federal government during the pandemic. Maine has taken steps to try to bolster state-level support for families, but experts worry it won’t have the same benefits. 

“This is an instance where people with low income and the data are all saying the same thing — which is that a little more income for families goes a long way,” said Ann Danforth, a policy advocate for Maine Equal Justice. 

Those percentages come from what’s called a “supplemental poverty measure,” which accounts for government benefits, post-tax income and costs of running a family such as commuting, child care and healthcare, explained James Myall, an economic policy analyst for the Maine Center for Economic Policy (MECEP).

That 12.3% is the national child poverty rate. Individual state rates calculated to account for the expanded child tax credit are not available, but advocates like Danforth say they see the effects of poverty on children in Maine, especially those in rural counties and among people of color. 

Under the March 2021 American Rescue Plan, more families were eligible to receive more money through the federal Child Tax Credit. The amount of money per child increased and was paid out monthly. Families with low income who weren’t previously eligible also gained access to the program.

However, the extra dollars and monthly payments stopped at the end of 2021 when Congress failed to renew the program. That took away money families reported using to buy food, cover school expenses and pay for child care, according to the Census Bureau. 

Maine child tax credit falls short of federal expansion

In the budget Gov. Janet Mills signed in July, Maine’s version of a child tax credit became more accessible to families with low or no income by becoming a refundable credit. This means families will benefit from those dollars starting in tax year 2024, even if they have little or no tax liability.

MECEP estimates the change would move about 3,500 youth in the state out of poverty, Myall told the Maine Morning Star. 

But, he said, “we haven’t been able to replace the benefit of the federal tax credit.”

Danforth heard firsthand from families how the federal tax credit expansion helped them put gas in their cars to get to work or pay for clothes for their children. Seeing the poverty rate more than double when that went away was “sobering,” she said. 

“To me, it also says that solving child poverty is within our power,” she said. “It’s a policy decision.”

Removing an income minimum for Maine’s tax credit is progress, but Myall said there’s more to be done. 

Although the $300 per dependent tax credit is available to more Mainers, it doesn’t come with the added benefit of monthly payments. Currently, Myall said, Maine doesn’t have the infrastructure to pay families monthly like they were under the American Rescue Plan. 

“Families worry about their bank balance every week or every month, not over the course of a year,” he said.