Advanced monthly payments from the 2021 Child Tax Credit expansion were associated with short-term improvements in child behavioral health, but those gains disappeared after the payments ended, according to a Dec. 10 study published in The Milbank Quarterly.
Congress established the tax credit in 1997 to provide financial assistance for middle-income families, offering up to $2,000 per child annually for children up to age 16. Parents needed to earn at least $2,500 to qualify. The 2021 expansion increased the credit to $3,600 per child age 5 years or under and $3,000 for children ages 6-17. It also made the lowest-income and unemployed parents eligible for the full credit.
Researchers led by Guangyi Wang, PhD, from Harvard University’s T.H. Chain School of Public Medicine in Boston, analyzed data from 1,028 children who participated in the 2020–2021 waves of a national longitudinal survey. Child Tax Credit exposure was calculated using benefit eligibility rules, and outcomes such as caregiver/self-rated child health, behavioral problems and household food insecurity. The study used individual fixed-effect models to estimate within-person changes in outcomes across three time periods: during monthly CTC payments, after expiration and after lump-sum distribution.
- During the monthly payment period from November to December 2021, every $1,000 increase in Child Tax Credit exposure was linked to a 0.69-point drop in behavioral problems — a 10% reduction from baseline.
- No improvements were observed after monthly payments ended, even with the lump sum payment, suggesting the temporary nature of the benefit may have limited its long-term impact.
- Following the lump sum, children from lower-income families saw a 0.95-point increase in behavioral health problems and a 0.075-point decline in caregiver-rated health, compared with higher-income children.
- Black children had increased behavioral health issues after payments ended, while Hispanic children experienced a decline in food insecurity when the monthly payments expired and after receiving the lump sum.
- The authors suggest that distributing unconditional cash benefits more regularly may better support child behavioral health and buffer families against economic stress.
