Illinois' recent state budget includes a new Child Tax Credit. WNIJ education reporter Peter Medlin talked to Aimee Galvin, government affairs director with the education equity & policy group Stand for Children, to explain how the new child tax credit works and who's eligible.
Aimee Galvin (AG): “Individual taxpayers will be eligible for an additional tax credit if your income was below $50,000 per-year. If you are a joint filer, your income has to be below $75,000. What will happen, essentially, is that credit will be about a 20% increase to your Earned Income Tax Credit. That's where most people get their money back on their income. This is through the state, not federal. So, in your state income tax, you would see a 20% reduction and then after 2025 that will go up to a 40% reduction -- meaning a reduction in how much you owe in taxes.”
Peter Medlin (PM): “It sounds like there's also an age threshold. It’s for families of kids under a certain age?”
AG: “Correct, it's only for children under the age of 12.”
PM: “There's also a federal Child Tax Credit. So, this has to do with your state taxes versus your federal taxes?”
AG: “Right. So, this would only go through the state. Illinois is now one of 15 other states that have expanded the Child Tax Credit. Unfortunately, the federal Child Tax Credit has expired, and Congress has not been able to expand that -- which has then left a lot of states trying to fill in that gap. Unfortunately, that means the tax credit is not as much as folks were getting from the federal government, but this is still a way to put more money into the pockets of working families and families with children.”
PM: “Some of this is going to depend on your family situation is, but do we know how much the average family who qualifies could get from the tax credit?”
AG: “So, because it's structured from the Earned Income Tax Credit, it will depend on each family's number of children and their income. It could be $300 in some instances, an increase of a couple hundred bucks. I think for some of the others it can be as high as $700 depending on how many children you have and your income level. But what we use is that 20%. So, whatever you got from your Earned Income Tax Credit last year, increase it by 20% this year and then increase it by 40% in the years coming. Federal data shows that up to 80% of the Child Tax Credit is spent, immediately and locally, to buy goods and services. This is why we say the policy is not just good for families, but for all of Illinois.”
PM: “What do people have to do to make sure that they get this?”
AG: “When you're filing your taxes, this is just going to be one more deductible. It would be a box you click on TurboTax, or your tax accountant would be able to help you navigate this and make sure that you get that credit. So, no action will be required for people leading up to tax season. It's just going to be one of those things that, when you're filing your taxes, this is going to be hopefully presented to you as one of your credits.”
PM: “Can we just outline a little bit more about how big of an impact policies like this can have for families who qualify?”
AG: “The General, the Illinois General Assembly, this was a priority for them, which was really exciting to see. They committed $150 million over the next two years and then $100 million annually thereafter, which this means that this is going to bring financial security to families for years to come. This isn't something that is just a single boost one year and then goes away. Some of the federal data has shown that the long-term impact of the Child Tax Credit really impacts the state's economy. For every dollar that's spent on this refundable credit, it will save Illinois taxpayers $10 in state costs -- that's huge. I’ll also say that the federal tax credit cut child poverty nearly in half, and over 60 million children had benefited from that. So, while we're not going to see quite the same impact as that, statewide we're really hoping to see some reductions in child poverty.”
