Recipients’ Experiences of the Evolving Tax-Based Safety Net: The Case of the 2021 Expanded Child Tax Credit

Key Features of the US Welfare State

A central function of the social safety net is to provide economic stability—ensuring access to basic necessities and a minimum standard of living—through in-kind and cash transfers. In liberal welfare states such as the United States, social safety net programs aim to balance the goal of economic stability with the goal of self-sufficiency, with the expectation that individuals can eventually meet their basic needs without relying on public assistance (Esping-Andersen 1990). Safety net programs incentivize (and, sometimes, coerce) self-sufficiency by conditioning public support on employment and by limiting the duration or amount of benefits (Blank 2002). There is much debate among policy analysts and policymakers about the optimal design of social programs for meeting these economic stability and self-sufficiency goals, particularly around the form and frequency of benefit distribution. These debates have played out among the social programs administered through the tax system, which typically deliver transfers as cash. Advocates of refundable tax credits argue that cash transfers both enhance welfare by allowing consumers the choice and freedom to meet their own specific needs and improve efficiency by reducing administrative oversight relative to in-kind transfers (Currie and Gahvari 2008); critics of refundable tax credits often point to paternalistic concerns that beneficiaries of cash transfers might misuse the funds or reduce their labor supply (Currie and Gahvari 2008).

Cash transfers through the tax code also raise questions about the frequency of benefit distribution, as they typically come as a lump sum once per year when people file their taxes. This large infusion of income may serve as an opportunity for upward mobility (Halpern-Meekin et al. 2015), but lump-sum payments have also been criticized for doing little to help stabilize families’ monthly incomes, with some households experiencing material hardship and going into debt while waiting for their annual tax refunds (Greenlee et al. 2021; Jones and Michelmore 2019; Tach and Sternberg Greene 2014). Several small-scale experimental studies have found that periodic monthly payments through the tax code allowed recipients to pay down debt and cover unexpected expenses, ultimately leading to less financial and food insecurity (Andrade et al. 2019; Greenlee et al. 2021; Kramer et al. 2019; Maag et al. 2021). As these examples show, benefit form (such as cash versus in-kind) and frequency are key aspects of social policy design with important implications for households’ economic stability and security.

Social safety net policies also have longer-run goals of enhancing self-sufficiency by boosting human capital and supporting child development. For adults, this involves providing subsidized education, childcare, or training programs to support employment in sectors that offer higher wages and greater stability (Danziger et al. 2013; Duncan et al. 2007). Cash and in-kind benefits may also be viewed as investments in the next generation, aiming to break the intergenerational cycle of poverty by supporting healthy child development and access to opportunity (Chase-Lansdale and Brooks-Gunn 2014). A growing body of research has identified the intergenerational impacts of safety net policies, including the tax-based safety net. For example, as cohorts of children exposed to the EITC entered adulthood, researchers found longer run gains in their college enrollment, employment rates, and earnings in adulthood (Dahl and Lochner 2012; Evans and Garthwaite 2014; Barr et al. 2022; Bastian and Michelmore 2018; Manoli and Turner 2018). These wide-ranging and enduring positive effects underscore how tax policy has become a vehicle for promoting not only economic stability but also social mobility (Chetty et al. 2011; McInnis et al. 2024).

In addition to its consequences for individuals and households, the welfare state also serves an important macroeconomic stabilization function. By mitigating the negative effects of macroeconomic shocks on household resources, social safety net programs allow households to maintain consumption during economic downturns (Bitler et al. 2017; Moffitt 2013). This prevents substantial reductions in aggregate consumption and demand, thereby stabilizing the economy in the short run and fostering the conditions necessary for stable economic growth in the long run. In the US, such stabilization has often been tied to programs such as unemployment insurance and, during especially strong economic downturns, direct stimulus payments administered through the tax system (Baker et al. 2023). The effectiveness of other social safety net programs as automatic stabilizers is more contested, particularly with respect to the balance between bolstering consumption and reducing work incentives (Moffitt 2013; Aizer et al. 2022); some scholars have argued that social safety net programs are not as effective as macroeconomic stabilizers as they could be because extensive administrative burdens limit eligibility and delay payments (Dynan 2019).

More broadly, social policy plays a key role in conferring social citizenship and social inclusion by determining who has access to the resources and services that enable them to participate fully in society (Katz 1986; Marshall 1950; Skocpol 1992; Bruch et al. 2010; Haney 1996; Lamont 2018; Sykes et al. 2015). The tax-based safety net has programmatic features that may serve to promote social inclusion relative to traditional safety net programs, as delivery through the tax code connects beneficiaries to other taxpayers and separates them from the often stigmatizing encounters with other social assistance bureaucracies (Barnes et al. 2023; Halpern-Meekin et al. 2015). Furthermore, the specific amount of economic redistribution delivered via tax refunds may be less visible when it is commingled in a single tax refund with other tax credits, deductions, and refunds of one’s own tax overpayments (Howard 1997; Mettler 2011). Stigmatizing bureaucratic encounters may be further minimized when payments are sent automatically, as was the case for the monthly payments of the 2021 Expanded CTC.

There are also important differences among tax-based programs that have implications for social inclusion, however. For example, prior research has found that EITC receipt and credit levels are tied to earned income, and these associations reinforce longstanding notions of deservingness in American society and social policy associated with the virtue of work (Katz 1986; Ellwood 1988; Lamont 2000; Halpern-Meekin et al. 2015; Sykes et al. 2015). By contrast, Expanded CTC eligibility was defined more by universality than by targeting or conditionality: more than 90 percent of US children were eligible, ranging from those with zero earnings to very high earnings (more than $400,000 per year). Policy scholars have argued that universal policy structures may lead to less stigma than targeted and means-tested structures, with universal eligibility conferring basic rights of social citizenship to all and garnering wider political constituencies (Rainwater 1982; Skocpol 1992).

Recent trends in social policy reflect a growing emphasis on fiscalization—the use of tax policies and transfers to deliver public benefits (McCabe 2018; O’Brien 2017). Governments are increasingly using tax credits, deductions, and subsidies to promote behaviors and support populations in need, rather than relying solely on direct-spending programs. This approach to social policy aims to leverage the relative efficiency and administrative simplicity of the tax system (Hacker 2002; Howard 1997). It is especially popular among nations with welfare policies that favor private-sector participation and personal choice and responsibility (Morel et al. 2018; Prince 2001). Key examples of the growing fiscalization of social policy in the US include tax incentives for retirement savings, education expenses, childcare, and health-care costs. As the US shifts toward tax-based social policies, it is important to consider the implications for the functions of the welfare state described earlier related to economic stability and self-sufficiency, investments in children, social inclusion, and macroeconomic stabilization. The Expanded CTC had a distinctive and unprecedented structure—with near universal coverage of children and a hybrid disbursement schedule combining monthly and lump-sum payments—that offers a unique window into how social policy design shapes experiences of the social safety net.

Evolution of the Tax-Based Safety Net

In line with broader trends toward fiscalization, refundable tax credits like the EITC, enacted in 1975, and the CTC, enacted in 1997, have become important policy tools for reducing poverty and supporting low- to moderate-income families in the United States. Figure 1 charts annual federal expenditures on the EITC, CTC, AFDC, and TANF since 1990. President Bill Clinton’s welfare reform efforts in the 1990s expanded the EITC significantly and authorized the CTC, while eligibility for and generosity of traditional cash assistance (AFDC and TANF) declined. These policy changes were part of a broader shift to a work-based safety net (Blank 2002; DeParle 2004).

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Figure 1.

Annual Federal Spending on EITC, CTC, AFDC, and TANF, 1990–2022

Source: Authors’ tabulations of IRS SOI and HHS statistics. Values inflation adjusted to 2022 dollars. IRS Source of Income Data obtained from IRS Data Books by Year. HHS AFDC expenditure data obtained from the AFDC Baseline Report. HHS TANF expenditure data obtained from annual TANF Financial Reports.

Since its enactment, the CTC has provided middle-class families with children with a tax credit of $400 per child. Initially, the credit was nonrefundable—meaning families with limited tax liability could not benefit from it; this exclusion affected most low-income families. Since then, benefit generosity and eligibility have expanded several times. In 2001, the CTC was supplemented with the refundable Additional Child Tax Credit (ACTC), and eligibility was extended to lower-income families with earned income. During the 2017 tax reforms, the program was expanded again, increasing the maximum credit and refundable amount, while also extending eligibility to higher-income families (more than $400,000 for married parents).

Although historically the CTC has received less public and scholarly attention than other social safety net programs, it entered the spotlight during the COVID-19 pandemic as part of the American Rescue Plan. This 2021 Expanded CTC—the version of the CTC that is the focus of this article—was made fully refundable to low-income families, increased the maximum credit to $3,000–$3,600 per child (depending on child age), and made half of the credit available as monthly advance payments. The Expanded CTC was a safety net program of unprecedented scope in the United States, coming close to a nationwide child allowance: more than 90 percent of children nationwide were eligible, including those in families with no earned income (Curran 2022). During 2021, more than 36 million households received the Expanded CTC, including more than 61 million children (United States Department of Treasury 2021). In that year, the Expanded CTC lifted 3.7 million children out of poverty and reduced the national poverty rate to a historic low of 5 percent—30 percent lower than what it would have been without the expanded credit (Burns et al. 2022; Creamer et al. 2022; Parolin et al. 2022).

While Congress allowed the Expanded CTC to expire after just one year, researchers have identified notable short-term impacts of the program expansion on household and family well-being. For example, two-thirds of families in a national survey in 2021 (and more than 80 percent of those making less than $30,000 per year) reported that the Expanded CTC was important for meeting their regular monthly expenses (Rachidi 2021). Families reported spending the transfers on basic household and child expenses—food was at the top of the list across states and income levels (Karpman et al. 2021; Moellman et al. 2024; Roll et al. 2021)—followed by bills, utilities, housing, clothing, and school costs (Michelmore and Pilkauskas 2023; Perez-Lopez and Mayol-García 2021; Pilkauskas and Cooney 2021; Zippel 2021). The form of spending also appears to have evolved over the course of the year, with paying down debt more common in the early months and spending on household necessities and child-related expenses more common in the later months (Fisher et al. 2024). There is some evidence that the Expanded CTC led to improvements in parental psychological well-being, measured by depressive and anxiety symptoms, although changes in these outcomes are smaller and more mixed than outcomes related to material hardship (Gennetian and Gassman-Pines 2024).

Policy Design and Innovation in the Expanded CTC

The pandemic-era Expanded CTC structure shares some broad features common to all tax-based safety net programs as well as some unique features. First, eligibility requires claiming dependent children on your tax return. This requirement is similar to those of previous years’ CTC conditions and is also necessary in other tax transfer programs, such as the EITC, to receive the greatest benefits. The Expanded CTC distributed at a higher rate per child to a majority of applicable households compared to previous years. Figure 2 shows that the maximum amount in 2021 was $3,600 per child under age six and $3,000 per child aged six to seventeen. Like the previous CTC and current EITC, the Expanded CTC was also tied to household income. However, eligibility extended higher into the income distribution than other refundable tax credits, with an initial phaseout starting at $112,500 for heads of household ($150,000 for married couples) and a second phaseout starting at $200,000 ($400,000 for married couples), allowing for a much wider reach and more similar payments across low- and middle-income levels.

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Figure 2.

2021 Expanded Child Tax Credit Schedule for One Qualifying Child, Filing as Head of Household

Source: Authors’ tabulations of IRS data (Internal Revenue Service 2021; Internal Revenue Service 2022).

Note: Credit = CTC in 2020 and Expanded CTC in 2021.

Some features of the 2021 Expanded CTC are significant departures from previous versions of the CTC. Prior to the pandemic, the CTC was only available to households with incomes of at least $2,500, and it was only partially refundable, which meant that households with little or no earnings typically did not receive a refund. The Expanded CTC changed this provision and made the credit fully available and refundable to households in which parents had less than $2,500 or even no earnings that year. As a result, far more low-income households were eligible for the refundable Expanded CTC in 2021 than had been eligible in previous years. These provisions of the pandemic-era Expanded CTC meant that the tax credit was no longer tied to employment and earnings in the way previous versions of the CTC had been. Therefore, most Americans received the maximum benefit amount corresponding to the number and ages of their children, regardless of whether they had no earned income or were middle class.

Like other tax credits, the CTC is administered through the Internal Revenue Service (IRS); beneficiaries typically claim the credits when they file their taxes. In previous years, most people received the refundable CTC credit as a single lump-sum payment at tax time, similar to other refundable tax credits. As noted earlier, the lump-sum disbursement may serve as an opportunity for upward mobility, but it has also been criticized for doing little to help stabilize families’ monthly incomes. Periodic or monthly payments have been proposed as alternative distribution schedules, and several small-scale experiments found that periodic monthly payments led to less financial and food insecurity (Andrade et al. 2019; Greenlee et al. 2021; Kramer et al. 2019; Maag et al. 2021). This periodic payment schedule was brought to scale with the authorization of the Expanded CTC in 2021. Families were automatically issued half of their Expanded CTC in advance as periodic monthly payments from July to December (with a little-known option to opt out of the advance payments); they then received the other half as a lump sum when they filed their taxes for 2021, typically between February and June 2022. Thus, the Expanded CTC had a unique hybrid disbursement schedule with both periodic and lump-sum payments.

Data and Respondents

This study draws on data from a qualitative study of the Expanded CTC conducted by lead author Erika Abbott in 2021–2022. Abbott recruited twenty-nine Expanded CTC participants in 2021, and each respondent participated in one to four in-depth, semi-structured qualitative interviews during the twelve-month period starting in mid-June 2021, one month prior to the distribution of the first advance payment. Interviews therefore covered both the monthly advance and lump-sum Expanded CTC payments made at tax time. Figure 3 shows the timing of the interviews relative to the timing of the Expanded CTC payments. Given the four-month window between President Joe Biden signing the bill to enact an Expanded Child Tax Credit and the first check received by millions of Americans, Abbott swiftly recruited participants through advertisements on Craigslist and Facebook from across the United States to maximize the heterogeneity of the sample. Interviews were primarily conducted through Zoom.

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Figure 3.

Child Tax Credit (CTC) Study Timeline and Payment Schedule

Source: Authors’ compilation.

Participants came from sixteen states, ranged in age from twenty-three to fifty-six, and had incomes for 2021 between $0 to $125,000. Most respondents received the Expanded CTC automatically because they had filed taxes recently; three respondents did not receive the payments automatically—two had to wait for the payment as a lump sum with their taxes and one ended up not receiving it at all despite believing she was eligible. After verifying eligibility and receipt of the Expanded CTC, participants were interviewed quarterly, as summarized in figure 3, with the first interview taking place in the summer, just prior to receipt of the first Expanded CTC payment; the second and third interviews taking place in the fall and winter following receipt of periodic Expanded CTC payments; and the fourth and final interview taking place in the spring following receipt of the lump sum Expanded CTC payment at tax time. In all, Abbott conducted 104 interviews with 29 parents supporting a total of 50 children. This included 29 first-round, 25 second-round, 25 third-round, and 25 fourth-round interviews.

Table 1 summarizes the key demographic and economic characteristics of the study sample, which was drawn to ensure representation across income, family structure, and racial-ethnic identity among those eligible for the program. The range of earnings in the Expanded CTC sample was wide, reflecting the Expanded CTC’s broad eligibility, and included households with both zero earnings and earnings up to $125,000. About 25 percent of the sample earned less than $15,000 in 2021, and a similar proportion, about 25 percent of the sample, earned more than $75,000. In the following analyses, we define respondents earning less than $45,000 per year as low income (corresponding roughly to the eligibility threshold for the EITC with one qualifying child) and those making $45,001 per year or more as middle income. The respondents also reflected the racial-ethnic diversity of Expanded CTC recipients, as indicated by about half of respondents reporting their race or ethnicity as White, about a quarter as Black, and the rest reporting as Asian, Hispanic or Latino, or multiracial. About 60 percent of the sample filed taxes as married and the rest as single heads of household. Respondents also had a wide range of labor market attachments: about 28 percent not working, 34 percent working part time, and about 38 percent working full time at the time of the first interview.

Qualitative Analysis

Analysis of the qualitative data followed an abductive approach (Timmermans and Tavory 2012). We created an initial set of analytic codes from prior theory and research that captured what respondents understood about the structure of the program, normative evaluations of the structure of the Expanded CTC and other social programs, how participants spent the refund dollars, and meanings respondents gave to their refund expenditures. We applied these codes to the corpus of qualitative Expanded CTC data in a systematic fashion. Finally, we considered whether the qualitative perspectives on policy design and uses of the tax credit varied by income level. We provide representative quotes from these analytic codes, along with contextual attributes of the respondents, to illustrate our findings regarding the respondents’ experiences and uses of the Expanded CTC.

Universalism and Support for Caregivers and Children

A majority of the Expanded CTC recipients felt the near-universal coverage of the credit conferred a sense of fairness because it was for all parents who were doing the same job of raising children, regardless of employment status or income. One low-income White single mother from New York explained that this made sense because “whether you’re working or not, you’re still supporting your child.” Another respondent, a Black single woman from North Carolina with no earnings in the last year, remarked, “I feel like it shouldn’t matter how much you make. I mean, if you’ve got kids, you should be able to get it regardless.” A middle-income White single mother from Washington argued that it was fair that everyone received the Expanded CTC because “frankly, this is about ensuring that small children are cared for and that families are covered.” The view that the Expanded CTC was a fair way to support all caregivers raising children was held by about two-thirds of the Expanded CTC respondents and was shared by respondents across different employment statuses and income levels.

Some middle-income Expanded CTC respondents also perceived the program to be fair because it was not means-tested and so was available to middle-income households like themselves. One middle-income White married respondent from Texas shared that “working class, like lower middle-class, they’re the ones that are really benefiting from that extra [Expanded CTC] money because they fall in that gap between. I make too much to get services from the government, but I don’t make enough to survive really comfortably. So they’re in that zone and [the Expanded CTC] gets them out of that zone … and I think that’s important.” Another middle-income White married respondent from Colorado explained, “It’s a little different because it seemed like anybody would get it. It wasn’t excluding people based on their income. Usually, we don’t qualify [for other safety net programs], and this is nice to actually qualify.” These quotes illustrate the middle-income respondents’ perceptions of high marginal tax rates. They also contrast their experiences with the Expanded CTC and with means-tested social programs that have benefits cliffs, which can diminish their opportunities for upward mobility (Romich 2006).

A small handful of respondents voiced that the Expanded CTC was fair compensation for parenting in even stronger terms, alluding to it being earned or owed, especially because it did not punish higher income parents, as our middle-income respondent from Colorado put it. She explained that she was supporting her children like everyone else, and “you shouldn’t be punished for making more money. … Just because I live [in an expensive city], does not mean I should be punished for working or having a better job than somebody else who doesn’t have those credentials. You know, I went to school. I earned it.” One low-income single Black mother from Maryland, shared, “If you got kids, to me you should be getting [the Expanded CTC]. There shouldn’t be anything saying, ‘They make too much money, or this person don’t have this.’ … No, give the people what they’re owed. These are their children. They are owed this.” Among these respondents, the Expanded CTC was tied to their hard work raising children, which they viewed as work done by all parents regardless of income level; parents shouldn’t be punished for making too much money—they are still working hard to raise their children. These views of the credit framed as earned or owed were expressed by only a small handful of respondents, but this category is notable for its connection to prior research that finds this narrative is prevalent among those who received the EITC, which is conditioned on employment (Halpern-Meekin et al. 2015).

Although over two-thirds of the Expanded CTC respondents perceived the more universal structure of the Expanded CTC as fair, a small group (three of twelve) low-income respondents felt that the lack of means testing in the credit was unfair, and it should be more tied to need. Those who expressed this view felt that higher-income households didn’t really need the money. For example, one low-income respondent, a Black single mother from Florida, remarked how it was unfair that some of the middle-class families of her child’s friends received the credit: “His friends’ moms are going to the gym at 10:00. They’re, like, the moms who work out. Good for you, ’cause I start working at 9:00, so our lives are different. Their stress level is different. I don’t think it’s fair for them to get the same tax credit. And some of them they’re married to pilots, their husbands are like a sailor of some ship. They married well.” While this small group of lower-income respondents felt the credit was not fair and pointed to their belief that higher-income households didn’t really need the funds, over half of the middle-income respondents felt that the credit was fair. One White low-income married mother from Louisiana said, “For the income, I’m fine leaving it [the eligibility income limit] there, because even though it’s pretty high, everybody goes through hard times.”

Getting Ahead, Getting By

The Expanded CTC payments were made available half as monthly advance payments and half as a lump sum at tax time. Similar to lump-sum EITC payments (Halpern-Meekin et al. 2015; Sykes et al. 2015), the lump-sum Expanded CTC payments received at tax time fueled mobility dreams, paying down debts, and purchases of larger-ticket items. Respondents did not usually differentiate where their lump-sum tax refunds came from, and considered all tax return sources—Expanded CTC, EITC, and others—as a singular refund. Some respondents noticed that their refund was larger for 2021 and assumed this was because of the Expanded CTC, although they did not do a precise accounting of the sources of the increase. Some respondents received the Expanded CTC but were not eligible for the EITC, and they were certain that their refunds were from the Expanded CTC since they had been receiving the monthly advance payments beforehand. But for the vast majority of respondents, the Expanded CTC was lumped in with other tax transfers and used on bigger-ticket expenses and debts.

In contrast, monthly advance Expanded CTC payments were distinct, and viewed less as a means to get ahead and more as a means to get by. When asked what she would do with the first advance check from the Expanded CTC, a White middle-income married mother of two from Texas said, “Pay the rest of my rent for this month. I am expecting $750 [per month from the Expanded CTC]. I am really hoping they don’t mess it up. I’m really hoping it’s on time, because I do feel like if I don’t get that into my landlord, we’re in trouble. We already paid her $600, so giving her the rest is still short, because our rent is $1,490, but it’ll be almost the full amount, and I might be able to scrounge up the rest.” Many respondents shared this sense of being on a financial precipice, as the first monthly refund check came through just-in-time. While many Expanded CTC respondents were initially uncertain about whether and how much they would receive, by the time of the second interview (several months later) they had started to view it as a reliable and steady source of income. At the same time, however, they knew that the future of the program was in flux over the course of the year and that it was not necessarily permanent. During the study period, Biden wanted to extend the Expanded CTC, though it was unclear how the Senate would vote on the extension.

Both lower-income and middle-income Expanded CTC respondents recognized that the monthly payments helped them respond to unexpected shocks to their finances and prevented them from falling further into debt throughout the ensuing months. When describing how the monthly payments were spent, one low-income respondent, a White married mother from Louisiana, recalled, “Well, the first month, the money went toward paying off our credit card. And then the second month, we ended up having to get tires for our car. We spent a lot of it on tires. And then the third one was after the hurricane, and we used it to pay the credit card bill for renting the dehumidifier. That’s what we spent it on so far.” When asked how she would get through these situations without the Expanded CTC, she said, simply, “Well, we will just have a lot of debt.”

For lower-income respondents in particular, this money was considered distinct, even when distributed monthly and in smaller increments than the lump-sum payment at tax time. One low-income single Black mother from Maryland explained, “If it’s coming in July, like they say it is, the 15th, I’m looking forward to around that time receiving something and being able to, like I said, use it and do what I need to do to get us a little bit further.” Once the payments started arriving, she used the money to pay for her daughter’s tuition at an online school. The previous year, during the pandemic, she had been unable to fully pay and had to ask her sister for help. “Honestly, my plan is to put something on my daughter’s tuition, because she is going to the same school again, so to put something on her tuition to help me out, [means] this time I have a little bit more of a game plan than last year.”

One aspect of the Expanded CTC that facilitated respondents’ use of the monthly payments was its automatic administration through the tax code—the lack of a complicated sign-up, the default option of monthly payments, and the separation from traditional social services bureaucracies. For example, when a Black married woman, age thirty-eight, with one child was asked if she would enroll in the advance Expanded CTC payments again if she had to go and sign up for it, she said, “If I had to enroll, if I had to do any more steps than what I have to do this year, I will not. I will just wait for it to come in taxes.” Although respondents generally appreciated the ease of the automatic payment structure, this respondent’s view was that added administrative burdens would cause her to actually forgo the advance payments—a view that was held only by other middle-income households who were not experiencing economic precarity. Moreover, although the automatic payment system eased administrative burdens for many, some did report steep barriers to correcting issues when checks did not come as expected or if they attempted to contact the IRS for other reasons.

Expenditures for Children: Necessities and “Treats”

The Expanded CTC respondents associated their payments strongly with their children. For example, a low-income married Black mother from Texas said, “I don’t care about what anybody would think, but to myself … that’s my child’s money.” A middle-income married Asian father from Idaho reflected on how the payments associated with his children conferred a special kind of status in his social circle: “I get $250 in my pocket because of my kids, and some of my friends who don’t have kids, kind of get jealous or whatever.” Like many other respondents, a low-income Black single mother from Maryland, shared, “I’m a firm believer. Look, because [my daughter is] here and she gave me this tax credit, I’m definitely going to use it towards something towards her.” As these quotes reveal, Expanded CTC respondents strongly associated receiving the credit because of their children, and as a result, they also had a strong belief that a meaningful portion of the credit should be invested in them.

The Expanded CTC gave both lower-income and middle-income parents a chance to provide essentials for their children throughout the half-year of monthly payments, and they were seen as a way to stay on track with financial expectations related to children. A significant share of the monthly payments was used on child-related expenses such as daycare, summer camp, school supplies, Halloween costumes, and Christmas presents. For Expanded CTC respondents, the timing of the periodic advance payments was significant, with payments beginning in the summer, just before the start of the school year. When asked what she would do with the first check, one respondent, a middle-income White married mother from New York said, “I plan to go to Walmart with my kids and my husband, and we’re gonna pick out some new clothes for September” when her children go back to school.

Additionally, like those who receive the EITC (Halpern-Meekin et al. 2015; Sykes et al. 2015), parents in the Expanded CTC sample placed special emphasis on using the credit not only on basic necessities but also small splurges to treat their kids to something special. Because Expanded CTC respondents connected their credit to their children, they felt it should be spent on little extras for them. This might be buying slightly nicer sneakers, brand-name rather than store-brand snacks, or all of the school supplies on their back-to-school list. A married Hispanic mother of two from Idaho shared, “I won’t spend all of it because I want to be really responsible. It’s [the kids’] money. It’s very important. But it’d be nice to spoil them a little bit.” This dual goal of getting their children what they needed and what they wanted was echoed by one respondent who shared that they would spend the credit on “new clothes and school supplies right before they go to school,” saying, “It’s going to be as needed. So, probably Christmas, I think, will be a really good Christmas. We’ll make the most of it.” Multiple respondents noted that they felt it would be a good Christmas for their children in 2021 because of the Expanded CTC.

Like prior research on the EITC has found (Halpern-Meekin et al. 2015; Sykes et al. 2015), Expanded CTC families also spent a small portion of their payments on treats—special experiences or purchases such as a meal out at a sit-down chain restaurant, a family barbeque or birthday party, or a weekend trip to the mountains or an amusement park. These were small in financial terms but were meaningful to respondents, as the consumption afforded low-income households a temporary respite from the stressors of financial precarity and, for all households, enabled middle-class consumption. The married Hispanic mother of two mentioned earlier said, “It’ll probably go towards, you know, maybe we get brand-name Oreos instead of the regular kind.” For the Expanded CTC recipients, this was especially significant because many parents felt they had been stuck inside for the past year of the pandemic, and they were itching to get themselves and their children out of the house. A middle-income single White mother of two, from Washington, recalled, “I think I told you about my plans to save up a little bit and take the kids to [a bigger city] and we did that. And it was so much fun.” Similarly, a White single mother of one from Illinois said, “It also allowed us to take a little trip, so we did a little road trip with some of the money and it came in really handy.”

Supporting the Economy

Another distinctive aspect of the Expanded CTC was its delivery within the context of the pandemic and in temporal proximity to other pandemic relief efforts, such as the stimulus payments in 2020 and 2021. Respondents noted that these various pandemic benefits were given to everyone and were due to the disruption to the economy as a whole, rather than perceived failures of individuals to provide for their families during strong economic times. Not all pandemic-era safety net expansions were viewed without stigma, however. One middle-income Expanded CTC respondent, a Black married mother from Florida, reflected the sentiment of other respondents when she shared that she felt many who received the extra unemployment insurance available during this time were not deserving: “It was a lot of money that I didn’t get. People that was [sic] unemployed were making more money than me. … A lot of people decided to not go back to work when they were called to go back because they were getting the free government money. The mega money, that’s what they are calling [it], the mega money.” It was notable that only two Expanded CTC respondents felt that the Expanded CTC should be conditioned on employment. The fact that respondents felt the Expanded CTC should not be conditioned on employment, even while they stigmatized other pandemic-era benefits that did not promote work, shows just how strongly respondents perceived that this program was different from other government programs and was for all parents, regardless of circumstance.

Additionally, about one-third of the Expanded CTC respondents framed their spending as beneficial to a stagnating economy that was struggling in the wake of the pandemic, and this framing was more prevalent among middle-income than low-income respondents. A White low-income married mother of two from Arizona said, “I guess it’s nice feeling like the current administration understands the struggle that families are actually going through as a result of the pandemic. And, you know, at first it was the worry about the economy, and how is the economy going to survive? Well, if the economy doesn’t survive, then workers don’t survive and families don’t survive. And so there’s that trickle-down effect. And so I guess it’s just nice feeling like the government actually understood—current government, understands that a little bit better, you know.” Similarly, a White middle-income married mother of two from New York, mentioned how it felt nice to be able to finally spend some money and framed that spending as a benefit to the economy, “It goes back into the economy. Whether it’s buying clothing, or even going out to dinner for a family of four is expensive these days. Sometimes we order a pizza to give them a little bit of a break as well. So everything helps. If we’re able to use some of the credit for things that are associated with the kids and with the family, then I think that that’s what it’s there for, to help.” Presenting their spending as a benefit to the economy is another way that the Expanded CTC recipients felt socially included, framing their consumption as connected to supporting the national economy. Of course, it is important to note that these interviews, like the Expanded CTC itself, occurred in the context of the massive economic shock of the COVID-19 pandemic. Expanded CTC payments started coming several months after federal stimulus checks were issued, making it difficult to say whether this theme of Expanded CTC consumption contributing to the economy was a product of that historical context or whether it would still be framed this way in stronger economic times.