Child tax credit payments would up average monthly income for HUD-assisted families by about 38 percent: report

The U.S. Department of Housing and Urban Development (HUD) says in a new report that advance payments of the expanded child tax credit would increase the average monthly income for families receiving its assistance by almost 38 percent. 

In an analysis of the credit’s impact on HUD-assisted families obtained by The Hill on Monday, the agency estimated that, over the course of the current six-month disbursement period, payments that total to an average of about $3,300 per household would account for nearly “27.5 percent of a family’s total income over that period.”

“The average monthly income for HUD-assisted families with children is approximately $1,460, or $8,760 over six months. On average, Advance Child Tax Credit payments will increase monthly income by $550 among these families,” states the report, which was authored by analysts Veronica Helms Garrison and Janet Li.

Millions of families began receiving monthly payments as part of the credit expansion included in the President Biden’s $1.9 trillion coronavirus relief law that was enacted earlier this year.

Under the expansion, the tax credit families can receive for children ages 6 to 17 was raised from $2,000 to $3,000, and for children under the age of 6 to $3,600. The law also allows low-income families to receive the funds immediately and requires the IRS to distribute payments from July to December. 

Of the 4.6 million households that received assistance from HUD last year, 34 percent, or about 1.6 million, consist of families with children, most of which are eligible for the advance payments.

While many families received automatic payments once the IRS began to distribute the funds, some did not if they did not file taxes last year or the year before. 

HUD has advised households to sign up for the payments so the IRS can determine their eligibility. The agency stated in the report that households that earn low or no annual wages should also “still file a tax return to access the Earned Income Tax Credit (EITC), which works like a negative income tax (that is, a tax refund) for those eligible.”

According to agency data, single heads of households that earned at least $18,650 last year were required to file tax returns. But analysts estimated that more than three-fifths of HUD-assisted families with kids reported less than that.

A racial breakdown of agency data also showed that nonwhite families comprise a vast majority of HUD-assisted households eligible for the advance payments. Black families account for approximately 53 percent of those households, Hispanic households for more than 20 percent and Asians household account for 1 percent.

“For a family who lives in HUD-assisted housing, this would be game changing,” Richard Cho, a senior adviser for housing and services at HUD, said in a Monday interview with The Hill. “So, provided that they sign up and get this money, we’re talking about three or four hundred dollars or more could be in their bank accounts or in their hands every month.”

Over the course of the six-month disbursement period for the advance payments, the agency said in the new report that “payments totaling an average of approximately $3,300 per household would account for approximately 27.5 percent of a family’s total income over that period.”

Democrats have said the expansion will greatly help reduce child poverty, with many calling for new legislation to make the move permanent.

But the expansion has not been without pushback from some Republicans, including Sen. Marco Rubio (Fla.), who called it “the first step toward a universal basic income” in a recent opinion piece.

Regarding the potential for the tax credit expansion to reduce child poverty, Cho said Monday, “that would definitely be the case in HUD-assisted families.”

“What we hope to see at HUD is that families who live in HUD housing aren’t going to just remain in persistent poverty, but that we can use the housing as a platform for helping them achieve greater financial and economic success,” he said.

“And this child tax credit, I think will be game changing in helping to do that,” Cho added.