Critical Help for Women and Families: What You Need to Know About the Tax Credit Expansions in Biden’s Proposed COVID Relief Plan
We are now in 2021, in the 11th month of a devastating pandemic and economic crisis that has disproportionately harmed women of color (and women overall), but women and families still have not received the help they need. Women of color especially continue to struggle with economic insecurity: one in five Black women and one in six Latinas do not have enough to eat, and more than one in 12 Black women and about one in 11 Latinas are unemployed.
President-elect Biden unveiled his plan for a new COVID relief package yesterday, and fortunately—in addition to much-needed measures like child care funding and state and local fiscal relief—the plan includes expansions to tax provisions that would provide critical support for women of color, and low-income women and families more generally. Specifically, Biden’s plan would expand and improve the Child Tax Credit, the Earned Income Tax Credit, and the Child and Dependent Care Tax Credit, three federal income tax credits that are targeted to people with low incomes and their families, for one year. These temporary improvements would provide millions of struggling women and families with a much-needed income boost. Here’s how:
- The Child Tax Credit (CTC). The CTC has a proven track record of fighting poverty: In 2018, the CTC lifted about 4.3 million people out of poverty, including about 2.3 million children. Biden’s proposal would increase the amount of the credit for all children but especially for younger children, who have higher poverty rates and benefit most from increases in family income. The proposal would also ensure that the credit reaches 27 million of the poorest children, disproportionately Black and Latinx children, who currently cannot receive the full credit.
- The Earned Income Tax Credit (EITC). The EITC benefits working people and families. Like the CTC, the EITC lifts millions of women and families above the poverty line every year, and the EITC especially benefits women of color: in 2018, 21 percent of Black women and Latinas received the EITC, compared to 9 percent of white women. Biden’s proposal would make the EITC more generous, and more available, for working people without children, who currently are eligible for only a very small EITC. This proposal would provide critical support for the many women of color working as essential workers—such as health aides, grocery store cashiers, and restaurant workers—who currently receive little to no benefit from the credit.
- The Child and Dependent Care Tax Credit (CDCTC). The CDCTC helps families meet the child care expenses they pay in order to work or look for work. The pandemic has brought home how critical child care is to the economy—and how women who do not have access to child care simply cannot work. Biden’s proposal would both significantly increase direct child care funding and expand the CDCTC, including by making the credit refundable. Refundability would make the credit fully available to low-income families, who currently are for the most part unable to benefit from the credit.
These are targeted, commonsense improvements that have been needed for years—but are especially important during an economic crisis like the one we’re currently facing.
The temporary tax credit expansions in Biden’s COVID relief plan would provide a desperately needed income boost for many women and their families, as the effects of the recession and pandemic continue to be deeply felt. These tax benefits are a necessary component of any pandemic response that centers women—and builds our economy back better.