Louisiana’s Analysis of American Rescue Plan Tax Credits for Families and Workers

Today, the White House released a new state-by-state analysis of the historic tax relief for working families in President Biden’s American Rescue Plan (ARP), which the White House said is helping lower costs for families and workers. Americans have received the largest ever Child Tax Credit, the largest ever Earned Income Tax Credit for workers without dependent children, and the largest ever Child and Dependent Care Tax Credit – which they said will help families meet the high costs of care.

Here’s more information on the American Rescue Plan according to a press release from the White House:

“Expanded Child Tax Credit for Working Families – Helping Deliver Record Lows in Child Poverty.

• The 2021 CTC will reach a record nearly 40 million families with 65 million children.
• Expanded $3,000 credit for kids age 6-17 and $3,600 for kids under 6
• Experts estimate that the Child Tax Credit was the main driver in the American Rescue Plan bringing child poverty to record lows in 2021– including record low Black and Hispanic child poverty.

Expanded Earned Income Tax Credit for Workers

• Tripled EITC for 17 million workers without dependent children from $540 to $1500 – first increase since 1993 – and extended the credit to younger & older workers.
• Helping millions of front-line workers: This expansion will help nearly 1.8 million cashiers and retail salespeople; almost 1 million cooks and food prep workers; and more than 850,000 nurses and health aides, 500,000 janitors, 400,000 truck and delivery drivers, and 300,000 childcare workers.

Delivered a historic increase in the Child and Dependent Care Tax Credit to support for millions of working families this tax season

• ARP increased maximum CDCTC by more than 6 times to up to $8,000 towards child care expenses in 2021 for a median income family with two children under age 13 (compared with a maximum of $1,200 in 2020).
• Will reimburse most families for up to half of their child care expenses (was only up to 20 percent of expenses in 2020 for most families)
• First time fully-refundable, making the credit fairer regardless of taxes owed.”

What does this mean for Louisiana? The White House American Rescue Plan (ARP) Implementation Team announced state-by-state
estimates of the expansion of the Child Tax Credit (CTC). They estimate the Child Tax Credit to benefit 584,000 families with 939,000 children in Louisiana. The vast majority of families in Louisiana will receive $3,000 per child ages 6-17 years old and $3,600 per child under 6 as a result of the increased 2021 Child Tax Credit. Nationally, it is estimated that nearly 40 million families with roughly 65 million children will benefit from the enhanced CTC under the ARP—the most ever.

The expanded Child and Dependent Care Tax Credit is providing working Louisiana parents with relief from the high cost of child care. This year, Louisiana families with incomes below $125,000 will get back up to half of what they spent on child care in 2021 while working or studying—saving up to $4,000 for one child or $8,000 for two or more children under age 13. Families earning up to $438,000 can get a partial credit. Nationally, more than 7 million families are estimated to benefit from expansion of the CDCTC, receiving an average benefit more than three times larger than in prior years.