What Columbia’s Study Shows About State Credits and Kids’ Futures

Sometimes Congress freezes, and states have to grab the wheel. That’s exactly what happened after the expanded federal Child Tax Credit (CTC) ended in 2021. While D.C. bickered, a dozen states (plus the District of Columbia) rolled out their own refundable credits to soften the blow. They weren’t as generous as the federal $3,000–$3,600 per child benefit under the American Rescue Plan, but they were enough to keep families from going under. And according to Columbia University’s Center on Poverty and Social Policy (CPSP), the strategy worked.

Which States Offered What

The state programs vary widely in size, age eligibility, and design. Some offered just a few hundred dollars, while others came closer to the federal benefit’s punch.

• Minnesota: Up to $1,750 per child under 18, a standout program projected to lift 13,000 kids above hardship thresholds, nearly half of what the federal program did in-state.
• Vermont: Up to $1,000 per child under 5, making a meaningful dent for families with very young children.
• Colorado: Up to $1,200 per child under 6, with an extra affordability credit in surplus years, projected to move 36,000 kids above the line, nearly matching the federal policy’s reach in the state.
• Massachusetts: $440 per child under 13. Modest, but still reported as a help for everyday expenses like groceries and summer programs.
• California & Illinois: More limited credits that moved smaller numbers compared to the federal reach.

Source: Bloomberg

Other states joining the refundable club include Maryland, Maine, New Mexico, New Jersey, New York, Oregon, plus the District of Columbia.

Bigger Than Just Dollars

The numbers tell one side of the story. The lived experiences tell another. A Boston University and Drexel University study, published in JAMA Network Open, found that families who received the expanded CTC in 2021 weren’t just paying bills; they were paying rent on time, avoiding food insecurity, and reporting lower levels of anxiety. One Massachusetts mom called the monthly payments during the pandemic a “lifesaver,” giving her family breathing room for basics and even letting her kids join sports programs. These improvements, food on the table, stable housing, and less stress directly feed into children’s development and long-term health.

Source: Bloomberg

But here’s the catch: millions missed out. Families without bank accounts, prior tax filings, or Social Security numbers often couldn’t access the benefit. That gap looms again today, as Congress has set a new $2,200 CTC beginning in 2025 that is not fully refundable, meaning the lowest-income households will again be left out.

The Design Flaw That Hits Hardest

Here’s where the rubber meets the road. A refundable credit gives families the full benefit even if they owe no taxes. A nonrefundable credit only offsets taxes owed, leaving out low-income households.

Under current rules:

• ~20 million children will get less than the full credit.
• ~2 million children will get nothing at all.

States tried to patch that hole. Minnesota and Colorado showed it could be done. But inconsistency is the name of the game; some states capped credits by age, others phased out benefits quickly, and a few only offered small amounts. That uneven patchwork leaves too many kids behind.

Hardship Creeps Back

The federal expansion in 2021 drove hardship among children to record lows. But once it expired, levels shot back up:

• 13.7% of kids were in hardship by 2023, according to Census data.
• Columbia’s real-time tracker showed 22.5% of kids living in hardship as of December 2024, compared to 14.7% four years earlier.

State credits didn’t erase the climb, but they blunted the spike. Without them, families in states like Minnesota, Colorado, and Vermont would have faced an even steeper slide.

Will D.C. Finally Catch On?

Today, 12 states and D.C. offer refundable CTCs. Another five have nonrefundable versions. But most were born out of federal retreat, and few are permanent fixtures. Worse, many eligible families don’t even know these programs exist.

The fix is straightforward:

• Make the federal credit fully refundable again.
• Remove income thresholds.
• Expand access to mixed-status families and non-filers.
• Treat the CTC as a core economic tool, not a tax perk.

Refundable credits do more than shrink tax bills. They stabilize housing, fill fridges, ease mental strain, and give kids a shot at steady development. States have shown the blueprint. Now, Washington has to decide whether to follow through or leave millions of children hanging.

Bottom Line

State-level refundable credits proved one thing loud and clear: when designed right, they don’t just trim tax bills, they keep kids fed, housed, and healthier. Minnesota, Colorado, and Vermont showed what’s possible, but a patchwork isn’t enough. To truly move the needle, Washington needs to lock in a fully refundable federal Child Tax Credit that reaches every family, every year, no matter their income or ZIP code. Don’t miss the next big shift in tax and policy. Subscribe to the MYCPE ONE Insights newsletter and stay ahead with expert analysis delivered weekly.

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