Young Child Tax Credit Would Target Families of Most Vulnerable Children during Most Critical Years

Early childhood is the fastest period of brain development in human life, and family economic security during these critical brain-building years is essential to ensure healthy development. Children whose families are struggling to make ends meet are less likely than their peers to have access to high quality early childhood education, regular preventive health care, healthy and safe communities, and those high-quality parent-child interactions that build young brains. In addition, the youngest children tend to live in the most economically vulnerable families, since parents with young children tend to be younger themselves and just starting out on their career paths.

One strategy to reduce child poverty is the child tax credit. It provides families with children under age 17 with a refundable tax credit of up to $1,000 per child. A recent paper from the Urban Institute analyzes a proposal for using tax policy to target the youngest children. A Young Child Tax Credit would provide an additional $1,000 benefit for each child under age five and have no earnings threshold, meaning that the poorest families could benefit.

The report finds that such a credit would target public investment where the science shows it would make the most difference—during early childhood. The report cites research demonstrating that family economic conditions during early childhood have more effect on children’s skills and achievements than family income during adolescence, and that family income during early childhood affects not only school readiness and school achievement, but also adult outcomes related to health and earnings.

Download Analysis of a Young Child Tax Credit.