A New Hope for Families: Illinois Approves First-Ever Child Tax Credit
Michael Chan-Lok
On May 29, the Illinois General Assembly approved the state’s $53.1 billion spending plan for the 2025 fiscal year, which includes legislation introducing the state’s first-ever Child Tax Credit (CTC) for each eligible child 12 and under. Illinois state Sen. Mike Halpin (D-Rock Island) explained that the state’s CTC was inspired by the expanded federal CTC through the American Rescue Plan (ARP) that lifted more than 2 million people out of poverty and gave families in need a financial boost.
With Gov. JB Pritzker’s (D) signature on June 5, Illinois became the 15th state to adopt a state CTC. The budget is set to take effect July 1, paving the way for qualifying families to receive a credit of 20% of the state’s Earned Income Tax Credit (EITC) in the 2024 calendar year and 40% the following year – averaging a tax credit between $300 and $600 and expected to impact over 840,000 households and reduce childhood poverty by over 3%. Erion Malasi, the Illinois policy and advocacy director for Economic Security Illinois, emphasized that the credit’s economic impact in the state would be significant, noting that every child tax credit dollar would generate $2.50 in economic stimulus.
“When parents receive the child tax credit, it’s spent locally and immediately, and that benefits every main street, every downtown across Illinois, making sure our businesses can stay afloat especially as we recover from the COVID-19 pandemic,” Malasi said.
Addressing Economic Strain: Advocacy for Illinois’ State-Level CTC
The pressures of inflation and the rising cost of living intensified calls to enact a state-level CTC in Illinois to assist families and improve their economic mobility.
“For the families that get it, it’s going to go a long way,” said Halpin. “I’ve talked to them…it can assist with a day of child care or it could just help with an extra week of groceries.”
Leading up to the budget vote, institutions and advocacy groups like the University of Illinois at Urbana-Champaign, the Illinois Economic Policy Institute, and Economic Security for Illinois have explored and outlined the benefits of implementing a state CTC and the potential impacts and outcomes on the families who need it most. Additional support from various coalitions – including unions, community organizations, consumer protection groups, nonprofit organizations, and more – further called legislators to pass a state-level CTC.
With the House advancing legislation earlier this year to temporarily expand the federal CTC, additional states such as Minnesota, Colorado, New York, Connecticut, Utah, New Jersey, Washington, D.C. making progress in enacting or improving their CTC programs in 2024, and over half of the nation’s governors calling for investments in early child care, the responsibility now falls to our policymakers – both at the state and national levels – to help lift the financial burdens weighing on low- to middle-income families.
Federal Delays and State Initiatives: The CTC Expansion Challenge
On the federal level, the bipartisan tax bill to expand the CTC has stalled in the Senate and its future appears uncertain. The clear benefits of a CTC expansion make the Senate’s delay in passing the bill a significant setback for nearly 16 million children in low-income families. The expanded federal CTC through the ARP reduced the rate from 9.7% in 2020 to 5.2% in 2021. However, when the expansion expired and lawmakers chose not to renew the policy, poverty levels nationwide more than doubled from 5.2% in 2021 to 12.4% in 2022 – significantly above pre-pandemic levels and spotlighting the direct results of policy choices.
On the state level, 35 states and the District of Columbia have the opportunity to provide the extra financial security many working families desperately need by creating a CTC for their state. States that have already adopted their own CTC can further improve their policies by expanding eligibility to ITIN filers and making credits fully refundable, if they haven’t done so already, ensuring that all children and families receive access to the critical resources they need.
Moving Forward
Illinois’ introduction of the state CTC marks a significant step forward in supporting families and reducing poverty. By continuing to prioritize the needs of working families, Illinois is not only addressing immediate economic challenges but also laying the groundwork for long-term prosperity and stability.