More than nine in ten American families with annual incomes below $35,000 are tapping into the enhanced Child Tax Credit payments to cover basic household expenses like food, clothing, shelter, and utilities, new research from the Center on Budget and Policy Priorities shows.

It was President Joe Biden’s $1.9 trillion American Rescue Plan, passed in the spring, that enabled the federal government to give eligible parents as much as $3,600 per year for a child under the age of six and up to $3,000 for children between ages six and seventeen. Broken down further, this means that a $250 or a $300 payment for each child will be direct deposited each month through the end of the year.

Due to the program’s success, the enhanced credits have been found to be one of the programs that made the cut as Democrats race toward an agreement over a framework for their social spending plan. The $1.75 trillion proposal has revealed that there will be enough money set aside to ensure that nearly forty million families will continue to receive the monthly direct payments for at least another year. However, that plan falls far short of what Biden and many Democrats had in mind—namely making the Child Tax Credit permanent.

“Many of these households are receiving the full Child Tax Credit for the first time thanks to the American Rescue Plan’s credit expansion. The Rescue Plan temporarily increased the credit amount, provided for the credit to be paid monthly rather than once a year at tax time, and halted a policy that prevented twenty-seven million children from receiving the full credit because their parents earned too little or lacked earnings in a given year,” writes Claire Zippel, senior research analyst at the Center on Budget and Policy Priorities.

“Congress should make it a top priority to ensure that the full credit remains permanently available to children in families with the lowest incomes, a measure that in percentage terms drives 87 percent of the expansion’s anti-poverty impact,” she continues.

The enhanced credits were also seen to help many parents and other caregivers make more investments in their children’s education.

“Some 40 percent of families with low incomes used their Child Tax Credit payments to cover education costs such as school books and supplies, tuition, after-school programs, and transportation to and from school,” Zippel notes.

“These findings are consistent with evidence from Canada, where parents—particularly those with low incomes—spend their child allowances on essentials and education expenses. A sizeable share of U.S. households with incomes above $35,000 also spent the credit on necessities, but a smaller share did so than lower-income families, who face more difficulties affording the basics,” she adds.

Ethen Kim Lieser is a Washington state-based Science and Tech Editor who has held posts at Google, The Korea Herald, Lincoln Journal Star, AsianWeek, and Arirang TV. Follow or contact him on LinkedIn.

Image: Reuters