By Elena Patel and Natalie Gochnour
Originally published in the Deseret News.
Approximately 1 in every 10 Utah children 0-5 years of age lives in poverty. Without additional help, many of these 28,000 children will continue to suffer food insecurity, poor living conditions and lack of opportunity. Fortunately, Utah now joins with 13 other states, offering a state child income tax credit that helps low-income families pay for basic needs. This week, the Utah Legislature passed out of committee HB316, Child Tax Credit Amendments, by Rep. Mark Strong. If the bill passes, Utah’s existing credit will expand to include all children under 6 years old (Utah’s existing credit only includes 1- to 4-year-olds). Lawmakers would do well to seriously consider this bill.
A child tax credit provides an income tax break focused directly on children. The credit boosts after-tax income for qualifying families on a dollar-for-dollar basis. The extra funds help offset some of the many costs of raising children. Utah’s child tax credit allows eligible families to claim up to an additional $1,000 per child each year. When combined with the federal child tax credit (up to $2,000 maximum), the credits provide sizable income support for low-income families, reaching as high as $3,000 per child.
Legislative staff estimate the proposed credit expansion will benefit 9,600 filers with an average tax savings of $417. And while impacts will vary based on income, filing status, age of dependents and other factors, the tax credit is designed to provide the greatest monetary benefit to Utah families with greater economic need. Expanding the bill to provide for refundability would provide even greater benefits to families with the most limited financial resources.
A bevy of research affirms many proven benefits of child tax credits for low-income families. In 2021, the federal government temporarily expanded its child tax credit as part of the American Rescue Plan by increasing its value, providing benefits monthly instead of annually and making it fully refundable against regular income taxes. In a staggering success, the credit lifted 3.7 million children out of poverty by year end — a 30% child poverty rate reduction. In addition, households receiving the credit were less likely to face material hardships such as food insecurity or have trouble paying for the cost of housing or utility bills. At the same time, there is little evidence that this expansion reduced employment for eligible families — alleviating a common concern about the negative effects of income support.
Child tax credit expansion seems particularly apropos in Utah because of our focus on families and our abundance of children. Utah claims the highest percentage of any state for the percent of the population under 18 years of age (27.3% in Utah compared to 21.7% nationally), the largest household sizes (2.9 persons per household in Utah compared to 2.5 nationally) and the fourth highest total fertility rate (1.85 births per woman in Utah compared to 1.66 nationally). And in one of the most stunning statistics from the 2020 Census, Utah’s share of five-or-more-person households exceeds the national average by nearly a factor of two (20.4% in Utah compared to 10.9% nationally). As renowned NBC News anchorman Tom Brokaw once quipped to a Utah governor, “You don’t have to tell me Utah has a lot of children, I’ve been in the Salt Lake Airport.”
But it’s more than the number of children; our state’s focus should be the needs of children. Tax credits help families pay for basics like food, housing, transportation, utilities, clothing and other items that support a great start in life. Nearly 1 in 3 Utah public education students (29% or 193,572 students) meets the definition of economically disadvantaged. Economically disadvantaged students graduate from high school at lower rates and score lower on standardized tests. Clearly, too many young Utahns lack the resources they need to thrive.
A $4 million investment in an expanded child tax credit isn’t just a policy choice, it’s a commitment to Utah’s future. By strengthening economic security for families, the state helps Utah’s children have a fair shot at success, creating lasting benefits for our economy and communities. It’s difficult to imagine a better investment in Utah’s future.