The “transformational potential” of the child allowance in the American Rescue Plan has been compared to the war on poverty under President Lyndon Johnson. As part of the pandemic relief bill signed by President Biden in March of 2021, most families will receive a $300 monthly check for each child younger than six ($3,600 per year), and a $250 monthly check for each child 6-17 years old ($3,000 per year) through an expansion of the child tax credit. This marks an historic moment for families in the United States, with some estimating that the reform will cut child poverty in half. 

Before this reform was passed, parents with sufficient earnings could claim up to $2,000 per child per year through the child tax credit. But because of minimum earnings requirements in the tax code, the credit failed to reach millions of low-income families.

One-third of all children (27 million children) in the U.S. did not receive the full credit, and one in ten children (approximately 6 million children) were completely ineligible. The vast majority of these ineligible children live in poverty, many with single mothers, and many of whom are Black or Latinx. 

The 2021 American Rescue Plan provision will lift millions of these children out of poverty, and will make millions more less poor. Currently, the reform will expire after one year, but many lawmakers and child poverty advocates are calling to make the reform permanent.